UC-NRLF 


^B    Tl    5bL 


CO 

C^ 

CM 

CO 

o 


540-714-20m-G0yS 


BULLETIN 


OF 


THE  UNIVERSITY  OF  TEXAS 


NO.  355 

SIX  TIMES  A  MONTH 


EXTENSION  SERIES  NO.  60 


AUGUST  25,   1914 


CO-OPERATION  IN 

AGRICULTURE,  MARKETING, 
AND   RURAL  CREDIT 


BY 

CHARLES  B.  AUSTIN 

AND      •' 

GEORGE  S.  WEHRWEIN 

Division  of   Public  Welfare,  Department  of  Extension 


PUBLISHED  BY  THE  UNIVERSITY  OF  TEXAS 

AUSTIN,  TEXAS 


Entered  as  second-class  mail  matter  at  the  postofTice  at  Austin,  Texas 


h 


As 


The  benefits  of  education  and  of  useful 
knowledge,  generally  diflfused  through  a  com- 
munity, are  essential  to  the  preservation  of  a 
free  government. 

Sam  Houston, 


Cultivated  mind  is  the  guardian  genius 
of  democracy.  ...  It  is  the  only  dictator  that 
freemen  acknowledge  and  the  only  security 
that  freemen  desire. 

Mirabeau  B.  Lamar. 


^^ctjju^f-^^ 


^f 


CONTENTS 

Department  of  Extension 4 

Introduction    ^ 

CHAPTER  I. 

CO-OPERATION. 

I.     Success   and  Failure 11 

II.     Eeasons  for  Success 15 

III.  Types  of  Farmers'  Organizations 25 

IV.     Essentials  to  Success  in  Farmers'  Organizations .  .  .  .  : 33 

V.     What  is  True  Cooperation 37 

CHAPTER  II. 

MARKETING. 

I.     Introduction    43 

II.     Crops   and  Values 44 

III.     Grain    46 

IV.  Hay  and  Feed 47 

V.     Corn   50 

VI.     Live  Stock   51 

VII.     Dairy  Products 53 

VIII.     Poultry  and  Eggs 55 

XI.     Fruit,  Truck  and  Vegetables 57 

X.     Cotton 65 

CHAPTER  III. 

RURAL   CREDIT. 

I.     Introduction   71 

II.     Nature  of  Capital 71 

III.     Why   Should   Farmers   Borrow  (?) 72 

IV.     A  Low  Interest  Rate 74 

V.     Farm  Loans  in  Texas 76 

VI.     Farm  Mortgages  in  Texas 79 

VII.     Jewish  Farmers'  Cooperative   Credit  Unions 83 

VIII.     Catawba  Rural   Credit  Association 87 

IX.     How   to    Form    a   Cooperative  Credit  Union  Under  the  Texas  Law .  91 

Bibliography    96 


52  IT)  08 


DEPARTMENT  OF  EXTENSION. 

OFFlCEnS    OF    ADMINISTRATION 

Sidney  Edward  Mezes,  Ph.  D.,  President  of  the  University. 
F.  M.  Bralley,  Director  of  tlie  Department  of  Extension. 
Sam  C.  Polk,  Secretary  to  the  Director. 


Division  of  Correspondence  Instruction. 

L.  W.  Payne,  Jr.,  Ph.  D.,  Head  of  the  Division. 
W.  Ethel  Barron,  Kegistrar. 

Division  of  Public  Welfare. 

Charles  B.  Austin,  M.  A.,  Head  of  the  Division. 

George   S.   Wehrwein,  B.   S.,   Specialist  and  Lecturer  on 

Cooperation. 
W.  A.  Schoenfeld,  B.  S.,  Specialist  in  Farm  and  Coopera- 
tive Accounting. 

Division  of  Public  Discussion. 

E.  D.  Shurter,  Ph.  D.,  Head  of  the  Division. 

A.  J.  Robinson,  B.  A.,  Lecturer  and  Athletic  Organizer. 

Marian  Edith  Potts,  B.  A.,  Package  Librarian. 

Division  of  Home  Welfare. 

Mary  E.  Gearing,  Head  of  the  Division. 

Jessie  P.  Rich,  B.  S.,  Lecturer  on  Domestic  Economy. 

Edith  Allen,  B.  A.,  Lecturer  on  Domestic  Economy. 

Division  of  Public  School  Improvement. 

E.  V.  White,  B.  S.,  Head  of  the  Division. 
Edward  E.  Davis,  B.  A.,  Lecturer. 
Amanda  Stoltzfus,  L.  L,  Lecturer. 

Division  of  Public  Lectures  and  Publicity. 

John  A.  Lomax,  M.  A.,  Head  of  the  Division. 

Division  of  Child  Welfare. 

A.  Caswell  Ellis,  Ph.  D.,  Head  of  the  Division. 
N"   L.  Hoopingarner,  B.  A.,  Assistant. 


I.     THE  DEPAETMENT  OF  EXTENSION" 

Purpose.  Every  "aniversity  should  serve  not  only  its  resident 
student  body  but  also  the  entire  community.  This  is  true  in  a 
l^eculiar  sense  of  a  state  university;  supported  as  it  is  by  the 
taxes  of  all  the  people,  it  is  under  business  obligation  to  render 
back  service  to  each  citizen  and  to  the  commonwealth.  In  a 
general  sense  a  university  fulfills  this  obligation  by  sending  edu- 
cated young  men  and  women  back  into  their  home  communities 
to  carry  with  them  the  culture  of  a  broader  outlook;  the  skill  ac- 
quired through  professional  training  as  lawyers,  teachers,  doctors, 
nurses,  home-makers,  business  men;  and  especially  the  inspiration 
to  unselfish  service  as  citizens  that  is  the  intangible  and  priceless 
asset  of  university  life. 

Taking  the  University  to  the  People.  This  indirect  contact 
with  the  whole  people  of  the  State  is,  however,  not  sufficient.  The 
constant  aim  of  the  President  and  Eegents  has  been  to  broaden 
the  scope  of  the  University  of  Texas  with  the  broadening  interests 
of  the  State,  and  to  bring  its  benefits  Avithin  the  reach  of  as  many 
individuals  as  possible.  In  1898  the  Summer  Schools  were  opened 
and  have  been  maintained  each  summer  since  for  the  convenience 
of  students  who  are  unable  to  attend  the  long  session,  especially  for 
the  teachers  of  the  Texas  schools  whose  professional  work  fills  the 
winter  months.  As  a  further  step  toward  making  the  University 
directly  useful  to  large  numbers  of  people  who  are  unable  to  at- 
tend the  classes  of  either  the  long  or  the  summer  session,  the  De- 
partment of  Extension  was  established  four  years  ago.  This  De- 
partment has  developed  rapidly,  and  its  work  is  now  carried  for- 
ward under  seven  divisions  as  follows : 

The  Division  of  Public  Welfare.  It  is  the  purpose  of  this 
division  to  go  into  the  field  and  investigate  the  economic  and 
social  conditions  in  the  State,  with  a  view  of  collecting  such  re- 
liable data  as  may  present  a  basis  for  intelligent  efforts  at  improv- 
ing such  conditions.  It  is  hoped  that  through  this  Department 
the  citizens  of  the  State  may  have  the  advantage  of  unbiased  Uni- 
versity experts,  who  can  come  to  them  and  advise  with  them  when- 


0  Bulletin  of  the  University  of  Texas 

ever  tliey  wish  to  plan  any  economic  and  social  movement.  The 
time  of  one  or  more  persons  will  be  devoted  to  the  various  prob- 
lems of  rural  economy,  sanitation,  social  life,  finance,  marketing 
and  kindred  subjects. 

The  Division  of  Public  Discussion.  This  division  has  for 
its  purpose  the  encouragement  and  intelligent  direction  of  public 
discussion  and  debate,  and  athletics  both  in  schools  and  out  of  them. 
Bulletins  have  been  issued  giving  advice  regarding  the  organiza- 
tion of  debating  clubs,  and  furnishing  lists  of  references  for  read- 
ing and  preparation  for  debate  on  a  number  of  topics.  Loan  li- 
braries on  important  subjects,  such  as  prohibition,  woman  suffrage, 
initiative  and  referendum,  prison  reform,  compulsory  education, 
the  commission  form  of  city  government,  municipal  ownership  of 
public  utilities,  and  the  tariff  and  free  raw  material,  have  been 
prepared  and  are  being  loaned  to  such  clubs  and  individuals  as 
request  them.  The  University  Interscholastic  League  has  been 
successfully  organized,  and  it  is  the  hope  of  this  division  to  assist 
in  developing  the  school  as  a  social  center  through  which  the  com- 
munity may  become  better  informed.  County  organizations  be- 
longing to  the  League  hold  annually  county  contests  in  debating, 
declamation  and  athletics.  Every  school  in  Texas  should  be  in- 
terested in  this  work,  and  a  League  should  be  organized  in  each 
county.  Upon  request  the  Constitution  of  the  League,  together 
with  bulletins  and  other  information,  will  be  mailed. 

The  Division  of  Home  Welfare.  The  division  deals  specifically 
with  all  problems  relating  to  the  home,  and  exists  primarily  for 
the  benefit  of  the  home-maker  and  with  a  view  of  placing  the  home 
on  the  same  intelligent  and  prosperous  basis  which  characterizes 
other  progressive  institutions.  Lecturers  and  demonstrators  will 
attend  fairs,  county  educational  rallies,  and  make  a  limited  num- 
ber of  engagements  through  the  medium  of  women's  organizations 
to  give  specific  instruction  on  subjects  of  vital  interest  to  the  home. 
Bulletins  will  be  issued  frequently  on  matters  pertaining  to  the 
home  and  may  be  had  on  application  to  the  Department.  Ques- 
tions will  gladly  be  answered  at  any  time  on  matters  pertaining  to 
the  welfare  of  the  home.  Further  information  may  be  obtained 
by  writing  to  the  division. 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit       7 

The  Division  of  Public^School  Improvement.  This  division 
has  in  charge  the  various  educational  exhibits  sent  out  by  the  Uni- 
versity to  the  fairs  and  other  large  gatherings,  to  call  to  the  atten- 
tion of  the  people  certain  needs  of  Texas  and  to  point  out  the  most 
intelligent  methods  of  meeting  these  needs.  These  exhibits  cover 
such  vital  subjects  as  school  buildings  and  school  hygiene,  plays 
and  playgrounds,  use  of  schools  as  social  centers,  medical  inspec- 
tion of  schools  and  care  of  the  feeble-minded.  Information  on 
miscellaneous  subjects  is  furnished  through  the  cooperation  of 
men  in  the  faculty  who  have  expert  knowledge  in  their  various 
fields.  Eeady-made  lectures,  accompanied  by  slides,  are  sent  out 
to  responsible  people  who  are  attempting  local  improvement. 
Short,  practical  bulletins  have  been  prepared  on  many  such  timely 
subjects  as  Wholesome  Cooking  under  Eural  Conditions,  Beautifi- 
cation  of  Home  and  School  Grounds.  Pamphlets  have  also  been 
issued  on  One  and  Two-Eoom  Eural  School  Buildings,  Three  and 
Four-Eoom  Eural  School  Buildings,  Eemodeled  Eural  School 
Buildings.  These  contain  full  detailed  drawings  and  detailed 
architect's  specifications.  As  its  title  indicates,  the  activities  of 
this  division  are  diversified.  The  aim  of  the  division  is  to  be 
useful  in  the  homes  and  in  the  schools  of  the  State,  and  to  this 
end  correspondence  with  communities  that  desire  its  cooperation 
is  invited. 

The  Division  of  Public  Lectures.  In  the  Division  of  Public 
Lectures  the  University  undertakes  to  provide  competent,  trained, 
and  impartial  speakers,  chiefly  from  among  its  faculty,  to  present 
to  the  people  the  great  questions  of  the  day,  and  interesting 
phases  of  literature,  science,  and  art.  It  is  by  no  means  the 
purpose  of  these  lectures  to  be  merely  amusing;  the  attempt  is 
made  to  present  in  a  popular  and  attractive  form  a  definite  amount 
of  reliable  instruction.  A  special  bulletin  setting  forth  the  avail- 
able lectures  has  been  prepared  and  will  be  sent  upon  application. 

The  Division  of  Child  Welfare.  The  Division  of  Child  Welfare 
Investigates  local  conditions  affecting  children,  and  assists  in  j)lans 
for  bettering  the  conditions  affecting  childhood.  The  hygienic 
and  sanitary  conditions  of  schools  hare  been  given  much  study, 
and  through  bulletins,  letters,  and  lectures  help  is  given  to  schoorl 


8  Bulletin  of  the  University  of  Texas 

boards  in  planning  new  schoolliouses  and  in  remodeling  old  ones 
to  make  them  more  hygienic.  The  feeble-minded  and  delinquents 
have  been  studied  and  assistance  given  in  drafting  laws  to  care  bet- 
ter for  them.  Numerous  other  studies  will  be  taken  up  as  rapidly 
as  funds  are  made  available.  A  psychological  clinic  will  next  year 
be  established  at  the  University  to  which  abnormal,  or  atypical, 
children  may  be  brought  for  diagnosis.  .  At  present  the  division 
gives  free  advice  by  mail  on  any  matter  pertaining  to  child  wel- 
fare. 

The  Division  of  Correspondence  Instruction.  Teaching  by  cor- 
respondence has  long  since  passed  the  experimental  stage.  While 
the  University  recommends  resident  work  when  residence  is  pos- 
sible, believing  that  the  experience  of  meeting  and  mixing  with 
fellow  students  and  the  consequent  training  in  real  democracy  as 
well  as  the  personal  contact  with  and  inspiration  from  the  teach- 
ers, is  invaluable,  yet  the  authorities  of  the  University  also  realize 
that  correspondence  study  offers  substantial  advantages.  In  cor- 
respondence instruction  the  teaching  is  entirely  individual;  each 
student,  no  matter  how  diffident  or  how  lacking  in  aggressive- 
ness, comes  into  individual  relation  with  the  instructor  in  a  way 
impossible  in  the  crowded  class-room.  He  recites  the  whole  of 
every  lesson  with  a  consequent  advantage  to  himself  that  is  ob- 
vious. Full  opportunity  is  given  to  discuss  all  difficulties  in  writ- 
ing, and  this  wTitten  discussion  in  itself  affords  valuable  train- 
ing. Further,  a  correspondence  student  is  not  hampered  by  the 
usual  time  regulations;  he  may  take  up  a  study  at  his  conveni- 
ence without  awaiting  the  fixed  date  of  a  college  term,  and  he 
may  push  the  work  to  completion  as  rapidly  as  he  is  able  to 
master  it.  Moreover,  correspondence  work  develops  in  a  marked 
degree  initiative,  self-reliance,  accuracy,  and,  above  all,  perse- 
verance. 


INTRODUCTION. 

The  Division  of  Public  Welfare  of  the  Department  of  Exten- 
sion of  the  University  of  Texas  was  established  for  the  purpose 
of  assisting  the  people  of  the  State  in  their  study  and  solution  of 
the  economic  and  social  problems  which  confront  them.  While 
there  might  be  some  question  as  to  .what  the  greatest  problems 
are^  there  is  no  doubt  that  our  State  is  classed  as  an  agricultural 
State,  that  the  majority  of  our  people  are  rural  people  and  that 
the  problems  of  farm  life  are  the  problems  which  confront  the 
most  of  the  people.  Viewed  in  an  indirect  way,  we  may  say  that 
the  problems  of  the  farmer  are  the  problems  of  all  the  people. 
Upon  his  success  depend  the  vitalit}^,  the  ability  and  the  progres- 
sion of  the  State. 

Eealizing  the  importance  of  a  sound  and  healthy  growth  and 
condition  of  agriculture,  the  Division  has  devoted  most  of  its  at- 
tention to  farm  life.  The  work  has  been  grouped  around  what 
may  be  spoken  of  as  the  Business  Side  of  Farming.  Among  the 
subjects  that  have  received  attention  are  mortgages,  tenancy,  cost 
of  production,  farm  book-keeping,  cooperation,  marketing  and 
rural  credit  and  financial  conditions. 

During  the  past  year  one  member  of  the  Division  has  been  a 
Collaborator  with  the  United  States  Department  of  Agriculture, 
and  we  gladly  note  here  that  much  of  the  material  upon  which 
this  Bulletin  is  based  has  been  gathered  in  cooperation  with  the 
Federal  authorities. 

One  writer  of  this  Bulletin  represented  the  University  of  Texas 
as  a  member  of  the  American  Commission  for  the  study  of  Euro- 
pean Systems  of  Agricultural  Cooperation  and  Credit.  We  pos- 
sess, therefore,  abundance  of  material,  in  many  different  lan- 
guages, upon  what  has  been  done  by  the  European  farmer.  In 
ilie  preparation  of  this  Bulletin  we  have  preferred  to  use  our 
illustrations  from  what  has  been  done  or  is  being  done  in  our 
own  country.  If,  however,  any  of  our  readers  desire  further  in- 
formation or  the  use  of  any  material  in  our  possession  it  will  be 
furnislied  for  the  asking. 

Both  writers  have  either  farmed  or  studied  the  problems  of  the 
farm  and   the  market  in  three  different  States  besides  our  own. 


10  Bulletin  of  the  U7iiversitij  of  Texas 

but  here  again  we  have  tried  to  draw  our  examples  from  Texas 
conditions.  We  must  learn  that  in  our  own  State  there  are  those 
who  are  successfully  meeting  some  of  the  most  perplexing 
problems. 

We  also  acknowledge  the  cooperation  of  our  own  State  Depart- 
ment of  Agriculture.  Commissioner  Kone  has  assisted  us  in 
many  ways.  We  believe  that  the  Proceedings  of  the  First  Meeting 
of  the  Southern  States  Association  of  Markets  published  by  his 
Department  should  be  read  by  every  farmer  in  the  State.  We 
have  usually  given  credit  wherever  we  have  used  material  from 
the  agricultural  papers  and  state  press.  Without  naming  an}^ 
the  Division  is  glad  to  thank  them  all  for  assistance  received.  To 
name  the  individuals  who  have  cooperated  with  us  is  impossible, 
unless  we  add  another  chapter.  We  are  indebted  to  the  thou- 
sands who  have  handled  our  corresjDondence  and  the  hundreds 
who  have  talked  to  us  or  written  us.  We  hope  that  we  may  in 
this  manner  repay  a  part  of  our  obligations.  We  are  not  trying 
to  send  you  a  formal  book  but  a  bulletin  in  which  we  have  tried 
to  profit  you  and  the  man  in  the  other  section  of  the  State  by 
putting  your  opinions  and  your  experience  alongside  of  his.  This 
is  the  beginning  of  cooperation. 

In  these  few  pages  you  may  again  find  a  part  of  the  message 
which  you  have  heard  from  us  by  word  of  mouth,  for  during  the 
past  year  we  have  visited  fifty-eight  different  counties  and  have 
discussed  these  questions  of  Cooperation,  Marketing  and  Rural 
Credit  with  more  than  forty  thousand  people. 

It  is  not  in  the  preparation  of  bulletins  like  this  nor  in  mere 
discussion  and  lecture  that  we  expect  to  best  serve  the  people  of 
Texas.  Bulletins  and  lectures  are  means  to  an  end.  That  end 
is  a  revival  of  rural  life,  by  making  rural  life  attractive  both 
socially  and  financially.  It  can  be  made  so  by  cooperation,  and 
we  are  ready  and  willing  to  aid,  either  by  printed  page  or  per- 
sonal visitation,  wherever  a  community  has  a  cooperative  move- 
ment under  consideration  or  in  the  actual  process  of  formation, 

Charles  B.  Austin-, 
George  S.  Wehrwein. 


CHAPTER  I 

COOPEEATIOi^   m  AGEICULTUEE 

SUCCESS   AND   FAILURE 

The  word  cooperation  as  it  is  generally  used  means  simply  get- 
ting together  to  carry  out  some  definite  object.  In  this  loose 
way  farmers  are  said  to  cooperate  if  they  get  together  to  form 
an  ice-cream  club,  if  they  unite  to  build  a  new  church,  or  carry 
on  such  large  business  enterprises  as  the  California  Citrus  Fruit 
Growers  are  doing.  In  order  to  avoid  confusion  the  term  ought 
to  be  applied  to  purely  business  organizations  and  then  only  to 
those  which  are  organized  according  to  the  definitions  of  a  purely 
cooperative  enterprise  as  defined  by  law. 

Failures  in  Cooperation 

In  the  United  States  all  farmers'  business  organizations  are 
usually  said  to  be  "cooperative."  As  a  result  the  hundreds  of 
farmer  stores  and  other  organizations  that  have  failed  for  one 
reason  or  another  are  looked  upon  as  failures  in  cooperation. 
Sometimes  cooperative  business  organizations  have  been  made  a 
part  of  a  communistic  scheme  and,  although  excellently  managed, 
failed  with  the  scheme  with  which  it  was  tied  up.  Somehow. the 
word  itself  conveys  the  idea  that  the  business  that  bears  the  name 
'^^cooperative"  is  one  that  is  different  from  the  usual  enterprise — 
that  it  is  of  a  broader  and  more  philanthropic  nature.  For  this 
reason  many  unscrupulous  business  firms  have  adopted  the  term 
and  used  it  either  in  their  titles  or  their  advertising,  hoping  to 
attract  the  farmer  or  workingman.  So  today,  when  the  average 
farmer  is  approached  by  some  one  with  cooperation,  he  recalls 
the  failures,  the  swindles,  and  schemes  that  have  been  promoted 
under  this  name  and  naturally  steers  clear  of  them  all. 

The  high  cost  of  living  and  the  question  of  better  farm  busi- 
ness, however,  have  brought  cooperation  prominently  before  the 
public  during  the  past  few  years,  and  today  many  people  think 
they  see  in  it  the  panacea  for  all  the  economic  diseases  society  is 
heir  to.     The  city  consumer  hopes  to  see  the  high  cost  of  living 


12  Bulletin  of  the  University  of  Texas 

reduced  "if  farmers  would  only  cooperate."  Together  with  the 
farmer  he  complains  that  there  are  too  many  middlemen  in  the 
system  and  wants  them  eliminated,  but  the  only  way  to  "elim- 
inate" the  middleman  is  for  both  consumers  and  producers  to 
take  upon  themselves  the  responsibility  of  the  marketing  process 
and  perform  the  middleman's  service  more  efficiently  than  he  is 
performing  it.  Some  want  to  go  a  step  further  and  have  the 
national  or  state  governments  take  over  the  whole  situation  and 
become  the  marketing  agent  and  the  money  lender  of  the  farming 
class.  But  for  the  same  reasons  the  government  would  have  the 
right  to  take  over  manufacturing  and  transportation  as  well  as 
distribution.  Farmers  as  a  class  need  to  feel  that  they  can  stand 
on  their  own  feet. 

The  thinking  farmer  knows  that  cooperation  cannot  be  such 
a  panacea.  Friends  of  the  movement  feel  that  this  blind  faith 
is  a  boomerang  to  be  feared.  Many  enterprises  built  on  this  wave 
of  popular  feeling  will  die  and  will  thus  leave  true  cooperation 
with  more  failures  than  ever  to  its  name.  Therefore,  the  farmer 
who  studies  the  subject  will  learn  to  build  better  by  studying  the 
mistakes  and  failures  of  the  past;  on  the  other  hand,  he  will  not 
be  misled  by  the  phantastic  expectations  of  enthusiasts. 

Success  in  Europe 

The  widespread  interest  shown  by  Americans  in  cooperation 
culminated  in  the  trip  made  by  the  American  Commission  to 
study  the  organizations  of  European  farmers.  Its  findings  and 
the  evidences  have  been  published  as  Senate  Documents  i^os.  214 
and  261  and  cover  a  total  of  about  one  thousand  pages  of  publi- 
cations the  size  of  the  Congressional  Record.  ■ 

The  reader  of  these  publications  is  impressed  with  the  success 
of  the  movement  in  Europe.  It  is  astonishing  to  see  the  extent 
to  which  European  farmers  carry  on  their  business  coopera- 
tively. Equally  astonishing  is  the  variety  of  their  enterprises. 
Statistics  for  1909*  show  that  Germany  had  over  22,000  coopera- 
tive organizations,  of  which  15,000  were  rural  credit  societies  and 
over  3700  were  creameries.  The  farmers  cooperate  in  the  manu- 
facture  of   their   butter.     They   purchase    their   feeds,    groceries, 

*Taschenbuch  ftir  Landwirlschaftliche  Genossenschaften.  published  by 
the  Reichsverband  der  deiitschen  landwirt.     Genoss.      (Darmstatt,   1910.) 


Cooperation  in  Agriculture,  Marketing,  and  Eural  Credit     13 

machinery,  fertilizers  and  sell  their  hay,  grain,  cattle  and  eggs 
through  their  farmers'  organizations.  They  own  their  ware- 
houses, slaughtering  houses  and  grist  mills.  They  have  mutual 
insurance  companies,  breeding  associations  and  even  potato  dry- 
ing associations.  The  little  farm  villages  are  often  supplied  with 
water  by  cooperative  waterworks  and  lighted  by  electricity  pro- 
duced by  their  own  electric  light  plant  where  some  rushing  brook 
can  be  harnessed.  In  Belgium  the  Maisson  du  Peuple  own  its 
bakeries,  tailor  shops,  moving  picture  houses  and  drug-stores. 

Denmark's  chief  products — bacon,  butter,  and  eggs — are  pro- 
duced, concentrated  and  exported  by  the  farmers  themselves. 
England's  wonderful  stores  and  Ireland's  rapid  progress  in  but- 
ter and  egg  production  owe  their  success  to  cooperation. 

The  following  table  is  taken  from  the  second  Year  Book  of 
International  Cooperation  (1910)  and  shows  the  strength  of  the 
movement  throughout  the  world: 

International  Summaries — Statistics  of  Cooperative  Societies 

A.       Europe :  No.  of  No.  of  inhabitants 

^    *  Societies  to  one  Society 

Austria   16,563  1,725 

Belgium    2,270  3,282 

Bulgaria    .  . .  .  : 727  5,551 

Denmark   5,033  51-1 

Finland   1,929  1,585 

France   10,983  3,573 

Germany    30,555  2,124 

Hungary    6,000  3,473 

Italy    7,564  4,569 

N'etherlands    2,679  2,184 

Norway    3,078  777 

Eoumania 2,904  2,051 

Russia   16,000  5,840 

Servia   1,252  2,148 

Spain 274  71,909 

Sweden   2,100  2,607 

Switzerland   7,827  481 

United  Kingdom 2,500  18,086 

Japan    5,149  10,048 

United  States  500  183,940 


1-i  Bulletin  of  the  University  of  Texas 

In  comparing  the  different  countries,  interesting  facts  are 
brouglit  out.  Even  little  Bulgaria  is  credited  with  727  associa- 
tions and  Japan  with  5,149.  The  United  States  has  only  500. 
This  is  due  to  the  fact  that  the  figures  for  the  United  States  are 
for  1905  and  since  then  the  cooperative  societies  have  made  great 
strides  forward.  Secondly,  the  note  accompanying  the  table  says 
that  it  "has  been  difficult  to  obtain  information  as  to  the  present 
development  of  cooperation  in  North  America.  The  unions  at 
present  existing  do  not  compile  statistics  and  the  returns  with  re- 
gard to  cooperation  published  by  the  statistical  offices  are  very  in- 
complete." This  accounts  for  the  comparatively  low  figures  for 
the  United  States. 

In  the  Year-Book  of  the  Department  of  Agriculture,  for  the 
year  1913,  Dr.  T.  N.  Carver,  in  his  article  on  the  "Organization 
of  Rural  Interests,"  lists  a  total  of  1867  farmers'  mutual  insur- 
ance companies,  2165  cooperative  creameries,  336  cooperative  cheese 
factories,  2020  cooperative  elevators,  which  alone  is  a  total  of 
6388.  There  are  hundreds  of  purchasing  societies  and  marketing 
organizations,  stores,  cow-testing  associations,  and  breeders'  asso- 
ciations which  he  does  not  mention  at  all.  This  shows  that  there 
are  certainly  more  than  500  cooperative  associations  in  the  United 
States.  He  adds,  however,  "The  question  often  arises  as  to 
whether  these  are  all  strictly  cooperative.  Undoubtedly  many  of 
them  are,  in  form  at  least,  merely  joint  stock  companies,  and  not 
cooperative  in  the  strict  technical  sense.  Such  a  claim,  however, 
is  based  upon  the  letter  rather  than  the  spirit  of  the  enterprise." 
(For  a  discussion  of  cooperative  vs.  joint  stock  enterprises,  see 
later  in  the  chapter.)  This  table,  however,  is  limited  to  strictly 
cooperative  societies  and,  therefore,  does  not  list  many  of  the 
associations  that  Carver  has  enumerated. 

Many  will  dismiss  such  comparisons  with,  "0,  well,  conditions 
are  different  over  there.  Their  laws,  governments,  and  customs 
permit  of  cooperation,  but  it  won't  work  in  the  United  States." 
Some  even  say  that  cooperation  is  suited  only  to  monarchial  gov- 
ernments and,  if  we  introduced  it  here,  our  own  people  would  be 
reduced  to  peasants  lorded  over  by  aristocratic  landlords.  But 
the  principles  of  cooperation  hold  true  all  over  the  world.  If  it 
has  been  the  salvation  of  the  European  farmer,  it  will  do  much 
for  the  United  States.     There  is  no  use  arguing  that  "conditions 


Coopemtion  in  Agriculture,  Marlceting,  and  Rural  Credit     15 

are  different.'^  Some  so-called  ''conditions"  need  changing  and 
uprooting.  It  is  no  use  plowing  around  these  stumps  any  longer. 
We  had  better  blast  them  out— get  rid  of  them!  Some  funda- 
mental differences  remain  and  we  will  plow  around  these  for  a 
while.     Cooperation  can  be  adapted  to  these  conditions. 

Reasons  for  Success  in  Cooperation 

It  would  not  be  fair  to  compare  Europe  with  America  in  the 
matter  of  cooperation  without  saying  something  about  the  differ- 
ences between  the  tAvo  continents. 

Permanent  Settlers 

Europe  has  been  settled  for  centuries.  America  is  new  and  our 
people  have  not  been  permanent  settlers.  Some  22  per  cent  of  our 
people  do  not  reside  in  their  native  state.  Thirty-seven  per  cent 
of  our  farmers  do  not  own  their  farms,  but  rent  them  and  are 
here  one  year  and  on  a  different  farm,  and  perhaps  in  a  different 
county  the  next  year.  In  Texas  52.6  per  cent  of  our  farmers  are 
renters,  and  the  problem  is  still  greater.  Teachers  tell  us  that  it 
is  not  uncommon  to  have  25  per  cent  or  more  of  their  pupils 
change  during  the  moving  season,  and  some  schools  are  almost 
depopulated.  It  is  not  uncommon  to  find  that  people  will  not 
know  neighbors  living  within  a  mile  of  their  house,  even  though 
these  people  have  lived  there  a  year  or  more.  Not  knowing  each 
other,  people  have  no  interest  in  their  neighbors  and  how  can  we 
expect  them  to  go  into  business  organizations  and  risk  their  money 
in  a  venture  with  people  they  know  nothing  about? 

Many  Nationalities  of  United  States 

Our  people  are  of  many  nationalities  and  it  is  hard  to  get  peo- 
ple of  different  habits,  traditions  and  customs  to  act  together.  A 
German  citizen  of  Texas  said,  "As  long  as  you  keep  the  farmers' 
organization  among  Germans  it  is  going  to  succeed,  but  as  soon 
as  you  admit  people  of  other  nationalities  it  is  going  to  fail." 
This  is  not  because  the  Germans  are  so  much  better  adapted  to 
working  together,  but  because  different  peoples  won't  "mix." 


16  Bulletin  of  the  University  of  Texas 

Prosperity  and  Extravagance 

On  the  whole,  the  American  people  have  been  unusually  pros- 
perous, and  this  is  also  true  of  the  farming  people.  We  have  had 
a  whole  continent  thrown  open  to  us  with  seemingly  inexhaustible 
resources  of  forest,  mineral  and  agricultural  wealth.  And  up  to 
a  few  years  ago  no  one  thought  of  "conservation,''  but  only  ot 
"development,"  "exploitation"  and  "opening  up  the  country." 
Our  governments,  state  and  national,  have  treated  these  natural 
resources  in  this  light  and  have  opened  the  door  to  any  one  who 
would  "develop."  Our  prosperity  has  made  us  feel  that  we  do 
not  need  to  work  together.  Mr.  Fay,  the  noted  English  writer  on 
cooperation,  says:  "A  cooperative  society  is  an  association  of  the 
weak  who  get  together  in  order  to  lift  themselves  and  others  out 
of  weakness  into  strength."^  .When  people  do  not  feel  that  they 
are  weak,  they  are  not  likely  to  feel  the  need  of  mutual  organiza- 
tion. One  farmer  from  Kendall  county  writes:  "I  know  of  no 
way  you  can  be  of  any  assistance  to  the  farmer — I  mean  the  pro- 
gressive farmer.  He  is  on  to  his  job,  and  gets  all  he  is  entitled 
to."  A  speaker  at  the  first  Conference  on  Marketing  and  Farm 
Credits  in  Chicago  (1913)  said:  "I  have  had  some  experience 
in  organizing  cooperative  associations,  and  I  remember  well  talk- 
ing with  one  German  farmer — he  happened  to  be  German — others 
are  largely  the  same.  I  drove  from  farm  to  farm,  to  influence  five 
or  six  men  to  go  into  an  organization.  I  tried  to  explain  to  this 
man;  I  talked  hard  and  earnestly  to  him,  and  when  I  finally 
thought  he  was  going  to  become  a  member,  he  said  to  me :  'Well, 
I  made  two  thousand  dollars  last  year;  I  think  that  has  been 
enough.'  "^ 

In  Europe  things  have  been  different.  The  land  has  been 
farmed  for  hundreds  of  years,  the  population  is  denser  and  more 
settled.  The  famines  and  wars  have  added  to  this  natural  eco- 
nomic pressure  and  people  have  been  forced  to  cooperate.  We 
had  a  taste  of  "hard  times"  in  the  seventies,  when  the  over- 
production of  wheat  and  corn,  combined  with  the  poor  transpor- 
tation facilities,  caused  such  low  prices  and  farmers  were  brought 
together  in  the  Grange.     Other  farmers'   organizations  had  sim- 

*Fay,  Co-operation  at  Home  and  Abroad,  p.  3. 
"Marketing  and  Farm  Credits,  p.  89. 


Cooperation  in  Agriculture,  MarTceting,  and  Rural  Credit     17 

ilar  origins;  all  lost  in  membership  and  power  when  prosperity 
returned. 

The  American  people  have  not  only  been  prosperous  but  also 
extravagant.  Mr.  Ford  in  his  book  "Cooperation  in  New  Eng- 
land" says,  "the  American  people  are  beyond  all  comparison,  from 
the  richest  to  the  humblest,  the  most  unthrifty  and  extravagant 
in  the  world.''^  Our  national  extravagance  is  reflected  in  our  pri- 
vate life;  so  European  national  economic  thrift  has  its  counter- 
part in  the  homo  life  of  the  people.  The  European  farmer  makes 
a  living  on  ten  acres  of  ground  and  enjoys  conveniences  unheard 
of  in  many  American  farm  homes.  This  ideal  of  thrift  is  naively 
expre^^sed  in  one  of  the  Raiffeiscn  booklets,  published  by  the  Raiffei- 
sen  Society: 

"Our  societies  are  usually  called  "^saving  and  loan  bank  socie- 
ties.' The  word  *^saving'  is  expressly  put  at  the  beginning  of  the 
phrase,  because,  in  the  industrial  war  that  we  are  engaged  in,  the 
words  of  Frederick  the  Great  are  even  more  applicable,  viz. : 
^Warfare  demands  three  things;  first,  money;  secondly,  money, 
and,  thirdly,  money."  And  money  does  not  drop  from  the  heavens 
without  toil,  but  it  has  to  be  gathered  laboriously  through  thrift 
and  economy.  God  be  praised  if  the  virtue  of  thrift  is  found  in 
the  village,  but  if  we  see  that  if  Gustie  has  a  new  hat  with  a  big 
feather  on  it,  Minna  at  once  goes  to  buy  a  still  more  expensive 
hat  with  a  still  bigger  feather;  if  we  notice  that  ''demon  rum' 
swallows  gigantic  sums  of  money  because  our  young  fellows  have 
too  much  money  to  spend,  then  it  is  clear  that  the  virtue  of  thrift 
needs  to  be  fostered.  But  thrift  thereby  does  not  become  a  sister 
to  greed  by  any  means,  but  it  simply  follows  the  footsteps  of  Him 
who  said  'gather  the  remaining  crumbs.'  ''^ 

Manner  of  Life 

Lastly,  our  history  and  natural  environment  have  brought  about 
a  difference  in  living  conditions.  In  many  European  countries 
the  farmers  have  lived  in  village  communities  for  hundreds  of 
years,  and  in  mediaeval  times  even  the  system  of  agriculture  was 
often  prescribed  by  the  group.     So  the  farmers  there  have  been 

^See  Introduction,  page  10. 
-Dai=i  Raiffeifton   Dorf. 


IS  Bulletin  of  the  University  of  Texas 

trained  in  working  together.  Our  farmers  have  had  the  opposite 
experience.  We  settled  as  pioneers  and  as  individuals,  rarely  in 
groups  and  each  man  was  for  himself.  When  he  could  see  the 
smoke  of  a  neighbor's  hearth,  he  moved,  for  he  considered  the 
country  too  crowded.  This  developed  in  him  a  spirit  of  inde- 
pendence and  self-reliance  which  perhaps  was  very  commendable 
in  the  early  days.  However,  times  have  changed  and  we  need  to 
adjust  ourselves  to  the  new  conditions  if  we  expect  to  get  the  best 
out  of  our  lives. 

''Independence'' 

This  feeling  of  independence  has  been  fostered  by  our  tradi- 
tions. We  like  the  word  "independence."  Our  political  orators 
have  harped  upon  the  "independence"  of  the  American  people, — . 
and  the  farmer  in  particular, — to  such  a  degree  that  we  prefer 
to  lose  money  and  the  benefits  derived  from  organization  rather 
than  give  up  our  so-called  "right  to  do  as  we  please." 

The  American  farmer,  as  a  class,  is  alone  in  this  respect. 
Other  classes  of  society  have  shed  some  of  their  "independence" 
and  work  as  organizations.  The  laboring  man  has  formed  his 
labor  unions  and  no  longer  bargains  with  his  capitalist  boss  as 
an  individual,  but  makes  his  terms  through  his  union.  The  capi- 
talist has  merged  individual  business  interests  until  we  have  trusts 
in  every  industry.  The  farmer  on  the  other  hand  has  usually 
faced  the  commercial  world  alone.  Of  course,  we  must  make  ex- 
ceptions in  the  case  of  the  Grange,  the  Alliance,  the  Wheel  and 
other  like  societies  that  have  been  mighty  forces  towards  uniting 
the  farmers.  The  Grange,  the  Farmers'  Union  and  the  Society  of 
Equity  of  today  are  examples  of  great  movements  aiming  to  unite 
farmers  for  social,  educational  and  economic  betterment.  Never- 
theless, it  is  true  that  the  farmers  are  more  independent  and  feel 
the  need  of  organization  less  than  other  classes.  There  is  always 
suspicion  of  the  motives  of  neighbors  that  makes  it  hard  to  build 
up  a  business  enterprise.  They  are  afraid  of  their  own  powers 
or  fail  to  see  the  value  of  cooperation.  An  instance  is  told  us  by 
a  Texan  of  McCulloch  county.  This  man's  father  lived  in  Massa- 
chusetts. He  bought  a  farm  in  a  community  where  farmers  sold 
chickens  at  $1.25  apiece,  while  milk  was  sold  to  collectors  at  9 
cents  a  gallon.     This  gentleman  tried  to  persuade  the  farmers  to 


CoGperatioii  in  AgrwiiUure^  Marlcetihg,  and  Rural  Credit     19 

organize  and  sell  their  milk.     But  he  could  not  get  them  to  do  so, 
and  as  a  result,  found  it  unpaofitable  to  go  into  the  dairy  business. 

This  spirit  of  independence  often  shows  itself  in  a  lack  of  busi- 
ness sense  or  a  feeling  of  obligation  to  the  will  of  the  majority. 
Some  one  finds  that  his  plan  cannot  be  carried  out,  and  rather 
than  yield  for  the  good  of  the  group,  he  breaks  up  the  organiza- 
tion. 

K  good  illustration  of  this  statement-  comes  to  us  from  a  county 
ill  the  eastern  edge  of  the  Blackland  Belt.  "A  number  of  farm- 
ers formed  an  organization  to  sell  their  cotton  seed.  Cotton  seed 
was  selling  at  $8.00  per  ton,  and  they  thought  they  could  do  bet- 
ter by  pooling  their  seed — calling  in  representatives  of  the  vari- 
ous oil  mills  at  a  meeting  and  have  them  bid  on  it.  It  was  agreed 
to  sell  the  seed  of  the  entire  organization  to  the  highest  bidder. 
The  meeting  was  held,  and  a  number  of  agents  of  the  oil  mills 
were  present.  The  bidding  was  spirited  and  the  price  was  driven 
up  to  fifteen  dollars,  the  secretar}'  was  just  ready  to  close  the  deal 
when  one  of  the  farmers  jumped  up  and  said,  ^Mr.  Secretar}^,  if 
they  can  pay  fifteen,  they  can  pay  sixteen,  and  unless  they  raise 
it  to  sixteen,  you  can  strike  my  name  off  the  list.'  This  started 
a  riot,  and  other  farmers  followed  his  example.  A  group  of 
them  felt  that  they  ought  to  stay  by  their  agreement  to  sell  to 
the  highest  bidder,  and  they  did  their  best  to  urge  the  others  to 
do  so.  The  result  was  that  these  finally  agreed  with  the  agent  to 
sell  their  combined  lots  for  fourteen  dollars  a  ton,  for  the  agent 
said  he  could  not  afford  to  pay  fifteen  dollars  for  the  very  much 
smaller  lot  that  they  had.  The  others,  who  refused,  failed  to 
make  a  sale  that  evening,  and  the  result  was  that  they  hauled 
their  seed  to  the  same  car  at  eight  dollars,  while  their  friends 
received  fourteen  dollars  a  ton."  "Farmers  won't  stick,"  is  the 
usual  terse  way  of  expressing  the  whole  story.  As  one  man  from 
Wise  county  writes,  "There  is  no  community  interest  to  speak  of 
among  farmers.  It's  every  fellow  for  himself  and  the  devil  take 
the  hindmost." 

Lach  of  Community  Spirit 

The  trouble  is  that  farmers  very  often  organize  simply  for  the 
dollars  and  cents  there  may  be  in  it  for  them  individually.  That 
is  why  an  organization  of  farmers  is  so  easily  broken  up.     As  soon 


20  Bulletin  of  the  University  of  Texas 

as  there  is  a  loss,  some  lose  faith  and  drop  out.  They  don't  realize 
that  every  business  has  its  "growing  pains"  and  if  members  will 
only  "stick  together"  it  is  bound  to  succeed.  No  one  knows  these 
weaknesses  better  than  the  middlemen  whose  business  is  being  in- 
jured by  the  farmers'  cooperative  concerns.  Tliey  know  that  it* 
they  undersell  the  farmers'  store  for  just  a  little  while  or  pay 
better  prices  just  long  enough  they  can  induce  enough  farmers 
to  pull  away  and  break  up  the  organization.  In  the  Kio  Grande 
Valley  of  Texas  the  truck  growers  associations  were  ruined  by  ex- 
actly such  methods.  Buyers  paid  more  for  the  produce  of  the 
independent  producers,  and  not  only  that,  but  paid  cash  where 
those  who  sold  through  thie  association  had  to  wait  until  the  re- 
turns came  in  about  three  weeks  or  a  month  after  the  shipment. 
Soon  the  members  began  to  desert,  and  the  association  was  broken 
up.  After  that  the  dealers  had  things  their  own  way.  Prices 
soon  fell,  then  they  accepted  consignment  shipments  only,  and  in  a 
little  while  called  on  shippers  to  help  pay  the  freight.^  A  farmer 
writing  from  Jefferson  county  sums  up  the  situation  pretty  well 
when  he  says,  "Farmers  will  not  stick  together  for  the  dollar  in 
the  future  if  they  see  a  penny  in  the  present."  Another  farmer 
expresses  his  idea  of  such  deserters  in  the  following  emphatic  way : 
"Did  you  know  that  there  are  some  ten  cent  men  yet,  living  as 
there  was  in  days  of  old,  like  Esau,  who  sold  his  birthright  for 
a  mess  of  pottage  ?  We  have  a  few  Esaus  in  the  Farmers'  Union, 
who  won't  patronize  their  own  institutions,  but  rather  go  to  one 
who  is  fighting  us,  and  who,  with  a  pat  on  the  shoulder,  will  say, 
*I  will  gin  your  cotton  just  as  cheap  as  that  Union  gin,  and  I  will 
give  you  a  nice  bugg}-  whip  and  the  Vhip-sucker'  bites — and  he 
caught  a  fool."^ 

This  lack  of  true  community  spirit — perhaps  it  might  be  called 
Christian  spirit — is  responsible  for  the  many  local  jealousies  and 
quarrels  that  have  arisen  over  petty  causes  of  which  any  community 
ought  to  be  ashamed.  In  one  county  there  are  two  communities 
in  which  the  farmers  established  telephone  lines,  but  quarreled 
about  some  minor  detail  and  they  put  in  two  separate  switch 
boards  at  both  of  these  places.     Now,  it  is  self-evident  that  the 

^Farm  and  Rancli,  June  6,  1914. 

-Farmer's   Fireside  and  Bulletin,  March  4,   1914. 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     21 

more  people  there  are  in  the  telephone  system,  the  more  efficient  the 
service  will  be,  but  rather  than  yield  a  point,  they  preferred  this 
arrangement. 

In  the  United  States  the  lack  of  the  cooperative  spirit  is  re- 
flected in  our  attitude  towards  all  community  interests.  There 
are  certain  functions  which  we  have  given  over  to  the  community. 
Ever  since  the  Christian  church  was  founded  we  have  worshipped 
in  common.  jSTo  one  ever  had  a  minister  come  to  his  house  to 
preach  to  him  individually.  We  do  not  bury  our  dead  on  our  own 
property,  but  in  a  community  owned  graveyard.  We  are  teaching 
our  children  as  a  community.  Our  public  roads  are  built  by 
the  people  as  a  group.  It  is  easy  to  see  why  a  man  should  pay 
attention  to  his  own  business.  It  is  harder  for  him  to  give  atten- 
tion to  the  business  of  his  community.  It  is  a  test  of  his  good  cit- 
izenship to  find  how  he  takes  care  of  the  community  interests. 
One  who  travels  about  the  State  learns  to  judge  the  individuals 
of  a  community  by  the  way  they  keep  up  its  community  interests. 
^'What  is  everybody's  business  is  nobody's  business,"  is  an  American 
proverb  that  explains  our  attitude  towards  the  public  interests. 

It  is  an  exceptional  community  that  can  go  into  school  im- 
provement, or  building  a  new  building,  or  the  employment  of  a 
teacher,  and  have  the  whole  community  act  as  a  unit.  We  have 
allowed  our  political  ideas  to  break  up  our  communities;  our  re- 
ligious prejudices  have  done  the  same.  The  remedy  for  this 
condition  lies  in  education  to  a  large  extent — education  in  a  broad 
sense  that  will  give.people  a  broader  view  and  a  more  tolerant  spirit 
towards  people  who  do  not  believe  as  they  do.  We  must  learn  to 
suppress  our  own  wishes  and  be  willing  to  work  with  the  ma- 
jority and  do  as  they  desire.  We  must  learn  to  work  with  our 
fellow  men  and  Avhen  once  entered  upon  an  organization  stay  by 
it  with  the  same  loyalty  as  a  soldier  stands  by  his  country. 

The  Germans,  who  have  made  such  a  success  of  cooperation 
through  their  Eaiifeisen  Associations,  speak  of  a  man  who  has 
the  true  cooperative  spirit  as  a  "true  Raiffeisen  man,"  and  in  one 
of  the  booklets  published  by  their  society  they  define  a  true 
l^aiffeisen  man  as  one  who  stays  by  his  society  under  all  circum- 
stances. "Therefore."  they  continue,  "whoever  wants  to  be  a  true 
Raiffeisen  man  must  buy  everything  he  needs  in  his  household 
from  his  association,  even  when  it  is  no  cheaper  than  anywhere 


Z2  Bulletin  of  the  Universitij  of  Texas 

else.  Yes,  he  must  buy  there  when  he  has  to  pay  a  penny  more 
than  at  some  other  dealers.  Only,  then,  when  we  are  so  disposed 
that  the  larger  whole  stands  higher  in  our  estimation  than  pri- 
vate profit,  will  we  strengthen  our  Raiffeisen  work  so  that  all  the 
hatred  and  cut-throat  competition  of  the  middleman  will  not  hurt 
us  in  the  least.'*^ 

Cooperation  has  been  bom  of  necessity  in  Europe  and  in  many 
cases  in  the  United  States.  But  it  need  not  be  so.  It  is  a  theory 
no  longer.  The  success  of  cooperation  in  both  continents  has 
demonstrated  that  farmers  can  do  better  in  organization  than  as 
individuals.  Let  us  hope  that  Texas  farmers  will  see  the  need 
of  cooperation  long  before  conditions  will  be  such  that  thoy  shall 
be  forced  into  cooperation.  'The  growth  of  tenancy,  the  deple- 
tion of  soil  and  greater  economic  competition  are  signs  pointing  in 
the  direction  of  conditions  which  shall  force  them  to  do  so. 

Need  of  Better  Business 

Another  reason  why  farmers'  organizations  have  failed  is  be- 
cause there  was  a  lack  of  business  methods.  The  average  x\meri- 
can  farmer  is  not  a  business  man.  In  fact,  he  has  not  had  the 
opportunity  to  learn  business  methods.  His  occupation  takes  him 
away  from  men  and  the  channels  of  trade  into  his  fields  where 
he  works  with  the  soil,  his  crops,  and  farm  animals.  His  home 
is  right  on  his  farm;  he  is  in  close  communion  with  his  family 
and  sees  other  men  only  as  his  business  carries  him  away  from 
the  farm. 

He  meets  men  but  once  or  twice  a  week  where  the  banker  or 
merchant  meets  with  people  every  hour  of  the  day.  The  mer- 
chant handles  money  and  commercial  paper  such  as  notes,  drafts, 
and  checks  daily.  He  has  to  be  a  judge  of  men  and  character. 
They  who  sell  to  him,  buy  from  him,  or  deal  with  him  are  shrewd, 
calculating  men  whose  competition  he  has  to  meet.  Such  con- 
stant watchfulness  sharpens  his  business  sense.  It  is  otherwise 
with  the  farmer.  As  one  farmer  from  Jim  Wells  county  puts  it : 
"The  trouble  with  the  producer  is  that  he  does  not  know  men, 
conditions,  and  markets."  The  shrewd  old,  so-called,  "pork 
packer"  who  wrote  "The  Letters  of  a  Self-Made  Merchant  to  His 

*Das  Raiffeisen  Dorf. 


Cooperaiion  in  Agruidture,  Marl-eiing,  and  Eural  Credit     23 

Son/^  says,  "When  a  packer  has  learned  all  that  there  is  to  learn 
about  quadrupeds  (hogs),  he  knows  only  one-eighth  of  his  busi- 
ness, the  other  seven-eighths,  and  the  important  seven-eighths,  has 
to  do  with  the  study  of  bipeds"  (people). 

The  self-sufficing  farmer  of  old,  if  he  remains  in  business,  has 
to  become  the  commercial  farmer  of  the  present.  "Farming  as  a 
business  not  for  a  living, — that  is  the  notion  of  the  new  farmer. 
He  is  a  commercialist ;  a  man  of  the  twentieth  century.  He  works 
as  hard  as  the  old  farmer  did,  but  in  a  higher  way;  he  uses  his 
four  ^M's,' — Mind,  Money,  Machinery  and  Muscles.''^ 

Briefly,  the  farmer  has  not  been  a  business  man  from  three 
points  of  vieAY.     First,  he  has  not  kept  books  and   so  does  not  i/' 
know  what  his  products  cost  him,  which  crops  were  produced  at 
a  loss  or  gain,  or  whether  his  business  has  resulted  in  a  surplus 
or  deficit  at  the  end  of  the  year.     Secondly,  little  attention  has  ^' 
been  given  to  the  selling  end  of  his  business;  he  has  not  studied 
the  demands  of  the  market,  the  marketing  process,  or  the  proper 
standardization  and  packing  of  his  i^roducts;  and  lastly  his  train-  -^ 
ing  has  made  him  unappreciative  of  "brains''   in  business.     He 
underestimates  the  services  of  the  middleman  or  the  value  of  an 
efficient  manager.     But  the  farmer  is  not  so  much  to  blame  for 
ail  this  for  even  our  agricultural  schools  have  afforded  very  little 
help  in  these  directions  up  to  a  few  years  ago. 

However,  this  lack  of  business  training  is  a  serious  handicap 
when  a  group  of  farmers  get  together  to  form  a  cooperative  or- 
ganization. Here  is  a  community  affair — "everybody's  business" — 
and  the  greatest  care  must  be  exercised  in  the  very  beginning. 
Too  often  farmers  undertake  enterprises  that  are  too  complicated 
or  too  large  and  with  their  meager  business  experience,  as  pro- 
moters, they  are  bound  to  fail.  Tliat  is  why  large  state-wide 
farmers'  enterprises  are  rarely  a  success^  The  secret  is  to  begins 
small  and  grow  with  the  business. 

Farmers  often  want  immediate  results.     They  forget  that  many  '' 
a  business  enterprise  was  promoted  and  money  was  sunk  in  its 
upbuilding,  or  in  advertising  for  several  years  before  the  business 
paid  for  itself;  but  this  did  not  discourage  the  men  who  went  into 
it;  they  cheerfully  paid  up  the  money,  feeling  sure  that  the  future 

^Farmers'  Fireside   and  Bulletin,   Feb.    11,    1914. 


24  Bulletin  of  the  University  of  Texas 

would  bring  its  returns.  The  manager  of  the  farmers'  organ- 
izations, on  the  other  liand,  is  often  expected  to  show  returns  at 
once,  and  tlie  returns  must  be  higher  than  those  received  by  their 
neighbors,  who  are  not  members  of  the  organization.  A  letter  in 
the  Farmers'  Fireside  and  Bulletin  of  February  11,  1914,  ex- 
presses the  same  view:  "The  impatience  of  the  farmer  for  the 
success  of  this  great  work,  has  done  much  to  wreck  this  work.  If 
they  would  read,  they  would  find  that  the  success  of  any  business 
organization  waited  for  years  before  they  accomplished  the  desired 
results/' 

Even  if  the  organization  is  successfully  launched  and  every- 
thing goes  well  for  a  year  or  so,  a  temporary  loss  may  break  up 
the  organization.  This  is  illustrated  by  an  instance  in  which  a 
number  of  farmers  banded  together  to  form  a  cooperative  live 
stock  shipping  association.  The  first  carload  of  live  stock  that 
they  shipped  brought  them  a  handsome  profit  and  they  were  brag- 
ging throughout  the  whole  community  how  much  better  they  kad 
done  than  the  would  have  by  selling  to  the  local  buyer.  A  second 
carload  was  shipped,  however,  at  a  loss  and  that  broke  up  the  or- 
ganization, ajid  no  further  community  live  stock  shipping  was  at- 
tempted. These  people  forgot  that  the  local  buyer  had  liiade 
money  on  some  deals  and  lost  it  on  others,  and  that  if  they  went 
into  the  same  kind  of  business  they  would  have  to  take  the  losses 
as  well  as  the  gains. 

On  the  other  hand,  nothing  will  teach  business  methods  quicker 
than  cooperation.  The  members  of  a  cooperative  society  are 
forced  to  keep  books  in  their  business  because  they  must  protect 
the  individual  in  his  relation  to  the  group.  The  auditing  and 
other  committees  are  schooled  in  business  methods  and  all  the 
members  are  brought  in  contact  with  commercial  papers  and  tlieir 
functions.  The  experience  so  gained  will  be  made  use  of  in  the 
farm  business  itself.  The  group  cannot  afford  to  do  business  long 
without  paying  attention  to  the  selling  end  of  the  farm  business. 
The  loss  from  unwise  business  transactions  and  poor  marketing 
falls  upon  the  whole  group  and  the  efficient  manager  is  welcomed. 

One  of  the  fundamentals  of  business  success  is  to  put  a  first- 
class  article  on  the  market,  and  herein  lies  one  of  the  great  pow- 
ers for  good  of  a  farmers'  organization.  Every  farmer  has  a  dif- 
'  ferent  idea  of  what  a  merchantable  product  is.  and  of  how  that 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     25 

merchantable  product  should  be  prepared;  the  result  is  that,  if 
there  is  no  organization,  a  hundred  different  kinds  of  packing 
and  packages  will  be  sent  out  from  one  station  and  the  prices  re- 
ceived will  be  so  much  lower.  However,  if  farmers  form  an  or- 
ganization and  adopt  a  standard  of  quality  and  packing,  they  wiUj 
not  only  put  a  marketable  product  on  the  market  but  also  estab- 
lish a  trade  name.  At  Milano  we  were  told  that  there  is  a  plan 
on  foot  to  get  ten  or  more  people  to  go  into  a  tomato  growers' 
association.  It  is  proposed  to  take  the  products  of  these  ten 
members  and  have  such  strict  rules  that  only  the  first-class  prod- 
ucts will  be  handled.  A  brand  is  to  be  established  and  put  upon 
each  package,  and  this  brand  will  guarantee  that  the  goods  are  up 
to  standard.  By  such  means,  it  is  hoped  that  whenever  people 
see  the  Milano  brand,  they  can  rest  assured  that  they  will  get 
OTiJy  iirst-class  produce.  A  name  will  be  established  for  this  brand 
and  higher  prices  and  a  good  business  expected. 

TYPES    OF    farmers'    ORGANIZATIONS 

Cooperative  Buying 

One  of  the  simplest  forms  of  cooperation  is  the  purchasing 
society  where  a  group  of  people  get  together  to  buy  fertilizer,  lum- 
ber^ groceries,  or  any  other  necessity  in  wholesale  or  carload  lots. 
The  local  merchant  is  often  in  a  position  to  make  very  reasonable 
terms  to  such  a  group  if  they  buy  in  bulk  and  pay  cash.  In  these 
cases  the  organization  selects  a  secretary  or  manager  to  handle 
the  goods  and  attend  to  the  business.  Such  a  transaction  is  not 
too  complicated  for  any  organization  and  with  growth  in  business 
experience  can  enlarge  its  activities.  Here  are  a  few  Texas  ex- 
amples: ^^e  ordered  cotton  bagging  as  an  association,  thereby 
saving  $150  to  $200  on  the  car.  We  also  ordered  lumber  by  the 
carload,  and  saved  also  at  least  $200  on  the  car.  We  ordered  seed 
potatoes.  It  is  our  intention  to  build  a  warehouse  here  as  an  asso- 
ciation, and  buy  and  sell  everything  together  and  we  think  to  do 
at  least  twenty-five  per  cent  better." 

"I  have  had  experience  once  in  buying  corn  cooperatively  for 
tlie  Farmers'  Union.  Farmers  of  Burnett  county  bought  direct 
from  farmers  in  Oklahoma."^ 

^Farmers'  Fireside  and  Bulletin,  December  10,  1913;   Febninrv  IS.  1914. 


26  Bulletin  of  the  University  of  Texas 

Many  of  the  Farmers'  Union  localr,  have  purchased  coal,  flour, 
corn,  and  feed. 

Meat  Clubs 

Fresli  meat  is  a  luxury  on  the  farm,  especially  in  summer,  yet 
by  cooperation  it  is  possible  to  have  it  with  but  little  expense.  At 
one  place  a  farmers'  club  induced  a  butcher  in  a  neighboring  town 
to  make  the  rounds  of  the  club  members  once  a  week.  In  Doug- 
las county,  Minnesota,  is  a  meat  club  which  h«s  been  in  existence 
for  over  twenty-two  years  without  the  least  bit  of  trouble  among 
its  members.  Every  week  one  of  the  members  butchers  a  beef 
about  one  or  two  years  old.  Friday  is  "butchering  day"  and  the 
owner  kills,  dresses  and  cuts  up  the  animal  during  the  day.  At 
night  the  neighbors  gather  at  his  house  for  a  social '  evening  and 
take  their  share  of  the  meat  home  with  them.^ 

At  Topsy,  Texas,  there  is  a  successful  meat  club  of  this  type. 
The  farmers  own  a  cooperative  slaughtering  house  and  have  hired 
an  expert  butcher  to  kill  the  animals.  He  is  paid  three  dollars 
for  killing,  keeps  the  records  for  the  club,  and  decides  whether  the 
animals  furnished  are  in  proper  condition  to  make  good  meat. 

The  record  is  kept  on  a  large  sheet  posted  in  the  slaughter  house 
and  includes  the  names  of  the  members,  the  amount  of  meat  taken 
by  each  member,  and  the  amount  furnished  by  the  animal  that 
the  member  brought.  At  the  end  of  the  year  if  a  member  has 
used  more  meat  than  he  furnished  to  the  club  he  pays  ten  cents 
a  pound  for  the  excess.  The  good  and  poor  cuts  are  divided  up 
equally  among  the  members  so  that  every  one  gets  the  same  pro- 
portion of  each.  Mr.  W.  D.  Lewis,  who  told  us  of  this  club,  said 
there  has  not  been  a  ripple  of  discontent.  One  year  a  widow  was 
unable  to  furnish  a  beef,  but  the  members  gladly  furnished  her 
meat  free  and  all  were  satisfied. 

One  farm  demonstrator  has  advocated  the  building  of  a  com- 
munity ice  plant  so  farmers  could  store  their  perishable  foods.  A 
cooperative  creamery  could  easily  add  this  feature  to  its  already 
existing  plant. 

'Supplement  to  Rural  School  Agriculture  (University  of  Minnesota), 
November,  1913. 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     27 

Telephones 

Eiiral  telephones  are  spreading  over  the  whole  State.  As  an  ex- 
ample^ one  farmer  writes,  ^'We  have  a  'phone  system.  There  are 
about  eighteen  rural  lines  now,  with  the  town  well  connected  np 
also.  We  believe  in  cooperation;  the  different  towns  near  us  have 
taken  the  telephone  fever  and  are  going  to  connect  with  us  soon. 
The  Oberin  and  Weinert  people  are  building  'phone  systems.  We 
are  expecting  Rule  and  Knox  City  to  build  soon  and  connect 
with  us."^ 

Farmer's'  Mutual  Fire  Insurance  Companies 

The  thirty-eighth  annual  report  of  the  Commissioner  of  Insur- 
ance and  Banking  of  Texas,  for  the  year  ending  August  31,  1913, 
lists  twenty-five  farmers'  mutual  insurance  companies  in  Texas. 
Twenty-three  of  these  make  reports  of  their  business.  The  re- 
port shows  that  during  the  year  1912,  $2,676,087.72  of  insurance 
was  in  force,  and  they  paid  losses  totaling  $62,133.59.  The  same 
report  shows  that  there  are  sixteen  local  mutual  aid  associations 
whose  business  is  confined  to  one  county  or  to  a  territory  within 
twenty-five  miles  of  the  home  office.  These  also  could  be  classed 
as  cooperative  associations,  although  some  of  them  may  not  be 
agricultural. 

Doctor 

At  the  Mercy  Farmers'  Union  Local  they  have  a  unique  insti- 
tution in  having  a  community  paid  doctor.  One  hundred  people 
have  agreed  to  pay  him  $12  a  year,  or  $1.00  per  month  each,  but 
he  has  the  privilege  of  practicing  on  the  outside  all  that  he  cares. 
The  people  say  they  are  well  pleased  with  this  plan  on  which  they 
have  employed  him.^ 

Cooperation  in  Dairy  Industry 

Dairying  is  a  coming  industry  in  Texas  and  it  is  one  that  is 
in  need  of  cooperation  among  the  farmers  interested.  In  the  first 
place,  a  silo  is  desirable,  if  not  necessary,  to  provide  the  feed  for 

^Farmers'   Fireside  and  Bulletin.  November    18,    1913. 


28  Bulletin  of  the  University  of  Texas 

the  cows.  A  Buna  man  told  us  that  he  would  like  to  put  in  a 
silo  but  could  not  afford  to  own  the  necessary  machinery.  "If  I 
could  get  two  or  three  of  my  neighbors  to  build  silos,  we  could 
afford  to  buy  the  machinery  together/'  he  said.  This  is  not  only 
true  in  this  case  but  wherever  farming  operations  demand  a  large, 
expensive  piece  of  machinery. 

'  If  enough  farmers  are  in  the  dairy  business  and  a  local  cream- 
ery is  not  advisable,  cream  shipping  associations  may  be  organized 
to  haul  the  cream  of  the  association  cooperatively,  as  the  farmers 
of  New  Mexico  have  done.  In  one  community  they  live  thirty-five 
miles  from  the  railroad  and  take  turns  in  taking  the  cream  to  the 
station. 

Where  the  amount  of  milk  produced  is  sufficient  that  a  cream- 
ery would  be  desirable,  it  ought  to  be  cooperative.  There  are  sev- 
eral in  Texas  today.  It  is  necessary,  however,  to  make  sure  that 
there  are  enough  patrons  with  enough  cows  to  furnish  milk  to 
make  it  profitable.  Promoters  whose  object  is  to  sell  machinery, 
have  often  induced  farmers  to  build  cooperative  creameries  where 
business  did  not  warrant  it,  and  the  macliinery  was  usually  sold 
at  $500  to  $1000  above  the  market  price.  In  the  northern  part 
of  Iowa,  there  are  over  five  hundred  cooperative  creameries,  while 
in  the  southern  part,  there  is  hardly  one.  The  reason  for  this  is 
that  grafters  came  in  and  "organized*  creameries  where  there  were 
not  enough  cows  to  keep  a  hand-churn  going."  It  is  impossible  to 
organize  farmers  in  that  section  now;  in  fact,  it  is  impossible  to 
get  farmers  to  believe  in  any  cooperative  ideas  because  they  have 
been  grafted  upon  so  often. ^ 

Codperaiive  Breeders'  Associations 

The  average  cow  in  Texas  produces  about  one  hundred  and  fifty 
pounds  of  butter  per  year.  This  is  not  profitable.  All  our  dairy 
associations  and  agricultural  colleges  are  agreed  that  we  need  to 
improve  our  dairy  herds  as  well  as  our  other  farm  animals.  But 
a  pedigreed  or  registered  sire  is  expensive  and  unless  a  farmer 
has  a  sufficiently  large  herd  of  his  own,  he  is  not  in  a  position  to 
own  one  himself.  However,  if  there  are  enough  farmers  in  a  com- 
munity raising  the  same  kind  of  stock,  say  Jerseys,  it  will  be  to 

'Market infj  and   Farm  Credits,  p.  91. 


C&dperation  in  Agriculture,  Marketing,  and  Rural  Credit 


•29 


their  advantage  to  buy  a  sire  to  head  all  the  herds  of  the  com- 
nnmity.  Mr.  W.  F.  Raven,  who  represented  the  State  of  Michi- 
gan at  the  Corn  Show  at  Dallas,  spoke  at  that  meeting  on  the 
oro-anization  of  these  breeders  associations  in  his  state.  The  plan 
briefly  is  this :  AVhen  tlie  owners  of  one  hundred  and  twenty  cows 
decide  upon  the  breed  they  wish  to  have,  the  state  field  agent 
takes  np  the  matter  with  the  farmers.  The  cow§  are  divided  into 
tliree  groups  of  about  forty  cows  each  and  three  bulls  are  pur- 
chased. At  the  end  of  two  years  the  bulls  are  changed  from  one 
group  to  another  to  avoid  inbreeding.  The  initial  cost  is  about 
$10  to  $40  per  member.  Today  there  are  seventy-seven  centers 
and  in  Livingstone  county  the  Holstein  Breeders'  Association  has 
three  hundred  and  forty-seven  members.^ 

Cooperative  Sale  through  Associations 

These  breeders'  associations  also  furnish  a  nucleus  for  cooper- 
ative buying  and  selling  of  animals.  A  buyer  wishing  to  buy  a 
carload  of  Jersey  cattle  has  to  spend  a  week  among  the  unorgan- 
ized farmers  to  find  what  he  wants.  But  by  having  registered 
with  a  secretary  all  the  stock  for  sale  in  the  community,  there  is 
no  difficulty  at  all.  The  Breeders'  Associations  of  Wisconsin  have 
fouufl  this  very  profitable  and  not  only  hold  public  sales,  but  ad- 
vertif^e  their  cattle.  In  Bulletin  Xo.  189  of  the  Wisconsin  Agri- 
cultural Experiment  Station,  this  is  brought  out:  "The  small 
town  of  Lake  Mills,  Wisconsin,  is  another  example  of  what  com- 
inunit}'  effort  can  accomplish  in  the  way  of  breeding  one  specific 
kind  of  cattle.  Through  the  efforts  of  a  few  men,  many  Holstein 
herds  exist  in  the  vicinity  of  Lake  Mills.  The  early  activities  of 
these  men  established  a  reputation  for  Lake  Mills  as  being  the 
greatest  Holstein  center  of  the  Middle  West.  Buyers  have  gone 
there  from  all  parts  of  the  world  to  buy  high-grade  and  pure-bred 
Holstein  cattle.  As  high  as  $175,000  worth  of  Holstein  cattle 
have  been  shipped  from  Lake  Mills  in  a  single  year.  Breeders  in 
the  vicinity  of  Lake  Mills  have  been  unable  to  satisfy  all  of  the 
demand. 

"Several  of  the  associations  now  in  existence  in  Wisconsin  are 
advertising  in  the  leading  dairy  papers  of  the  country  by  carry- 

^Sce  circular  4  of  the  Michigan  Agricultural   College. 


30  Bulletin  of  Ike  University  of  Texas 

ing,  at  tlie  expense  of  the  associations,  such  advertisements.  In 
reply  to  inquiries,  which  these  advertisements  attract,  sales  lists, 
published  at  intervals  determined  upon  by  the  association,  are  sent 
out.  These  sale  lists  contain  a  complete  enumeration  of  all  stock 
for  sale,  together  with  the  names  of  the  respective  owners,  i'rom 
this  sale  list  the  buyer  may  choose  whatever  he  may  desire. 

"A  community  organization  may  also  render  great  assistance  to 
its  members  in  selling  various  farm  products  and  in  buying  feed- 
ing stuffs  and  other  supplies." 

Some  excellent  breeders'  associations  are  found  in  other  States 
in  connection  with  the  United  States  Department  of  Agriculture. 
''Two  such  associations  are  now  at  work, — one  in  Minnesota, 
where  short-horn  cattle  are  being  bred ;  the  other  in  ^orth  Dakota 
where  a  group  of  German  farmers  in  the  semi-arid  regions  are 
breeding  Holsteins.  Tennessee  breeders  are  thinking  of  applying 
the  plans  to  the  production  of  mules;  and  interest  in  it  is  being 
shown  in  other  sections."^ 

The  sajne  type  of  associations  could  do  a  great  deal  in  the 
South  towards  the  community  eradication  of  the  cattle  tick.  At 
St.  Elmo,  Louisiana,  there  is  a  splendid  dipping  vat  built  by  and 
for  the  use  of  the  community  to  fight  the  ticks. 

Cow  Testing 

The  breeders'  associations  often  work  together  in  cow-testing 
associations.  The  individual  farnier  cannot  afford  to  have  a  large 
Babcock  tester  nor  give  the  time  to  the  work  he  ought  to,  to  find 
out  whether  his  cows  are  up  to  standard  or  not.  These  associa- 
tions hire  a  man  who  goes  from  house  to  house  and  spends  a  day 
or  so  at  each  farm  house,  tests  the  cows,  and  keeps  the  record  for 
the  farmer.  In  a  short  time  the  record  of  the  cow  will  show 
whether  she  is  paying  for  herself  or  is  merely  a  "boarder."  At 
Dickinson,  Kansas,  such  an  organization  was  formed  in  1912. 
They  had  twenty-one  members  and  three  hundred  and  seventy- 
nine  cows.  They  assessed  each  member  one  dollar  per  cow  pay- 
able quarterly  with  a  minimum  charge  of  twelve  cows.  It  was 
found  that  the  best  cow  in  the  herd  produced  $201.00  worth  of 
butter  and  her  feed  co?t  $55.91;  the  poorest  cow  produced  $21.38 

'Progressive  Fannor.  January  11,  1013. 


Cooperation  in  Agriculture^  Marketing,  and  Rural  Credit     31 

worth  of  butter  and  her  feed  cost  $33.23.  This  last  cow  helped 
to  cut  down  the  profits  of  the  first  and  ought  to  have  been  culled 
out  long  ago.^ 

Other  Breeders'  Associations 

The  same  type  of  organization  may  be  used  for  the  improve- 
ment and  sale  of  horses,  mules  and  swine.  Grayson  county  has 
begun  to  work  in  this  direction.  The  Sherman  Chamber  of  Com- 
merce has  taken  up  tlie  matter  of  organizing  a  hog  raisers'  asso- 
ciation. A  poultry  association  has  also  been  formed  in  this  county. 
Farmers  of  Lee  county  have  organized  a  Swine  Breeders'  Associ- 
ation that  has  more  than  one  hundred  members.  They  also  sell 
their  hogs  through  the  association,  and  buy  Irish  potatoes  directly 
from  Maine. 

When  it  comes  to  horse  breeding  associations  the  money  in- 
vested in  a  good  sire  is  a  good  deal  more  than  in  the  other  associ- 
ations mentioned.  Here  the  "promoters"  have  also  played  their 
game.  Many  such  associations  have  been  sold  $500  stallions  for 
$3000  or  more,  and  in  a  year  found  they  have  been  swindled.  The 
advice  of  competent  men  should  be  asked  before  money  is  invested 
in  an  enterprise  of  this  kind. 

Cotton 

In  the  cotton  industry  there  are  plenty  of  examples  of  farmers* 
organizations  that  are  doing  a  good  business. 

"Our  organization  in  this  district  (Quanah)  owns  and  controls 
nine  Farmers'  Union  warehouses  to  store  and  finance  our  cotton 
and  cotton  seed,  and  one  of  the  largest  oil  mills  in  the  state  (just 
completed)  to  grind  and  protect  our  cotton  seed."^ 

The  people  at  Anna,  Texas,  have  organized  a  company  which 
has  successfully  built  a  gin,  and  operated  it  for  the  past  season. 
The  organizers  tried  to  get  one  hundred  farmers  and  business  men 
into  the  organization,  but  got  only  ninety-three.  The  cashier  of 
one  of  the  banks  was  made  secretary-treasurer  and  has  had  a  great 
deal  to  do  with  the  organization  and  management.  He  told  us 
that  they  went  ahead  with  their  ninety-three  members  and  built 

^Circular  No.  35,  Kansas  Agricultural  Experiment  Station 
-Farmers'  Fireside  and  Bulletin,  December  3,   1913. 


32  Bulletin  of  the  University  of  Texas 

and  equipped  the  gin  for  $10,700.  They  allow  only  one  vote  to 
one  member,  restrict  the  number  of  shares  to  be  held  per  member, 
but  allow  voting  by  proxies.  At  the  end  of  last  year  they  paid  up 
the  difference  between  the  actual  share  capital  and  the  cost  of  the 
gin,  laid  aside  $300  for  their  reserve  fund  and  paid  twenty-five 
per  cent  on  the  capital.  The  actual  dividend  w^as  probably  near 
forty  per  cent.  None  of  the  officers  receive  pay  except  the  secre- 
tary-treasurer, who  receives  $25.  The  gin  has  proven  such  a  great 
success  that  they  are  thinking  of  putting  in  their  own  oil  mill, 
which,  however,  will  take  a  capital  of  $40,000.  They  do  not  have 
any  warehouses,  although  they  had  room  to  store  a  few  bales  of 
cotton.  This  gin  is  a  splendid  example  of  cooperation  between 
the  business  men  and  the  farmers  of  the  community.  The  gin 
company  lacks  some  of  the  features  of  a  truly  cooperative  concern, 
but  is  as  near  to  it  as  their  composite  membership  will  allow. 

In  Atascosa  county,  the  Farmers'  Union  secured  control  of  two 
gins  in  the  fall  of  1913,  and  found  them  so  successful  that  they 
organized  the  Cooperative  Gin  Company  of  Atascosa  count}-,  with 
the  object  of  owing  all  the  important  gins  of  the  county.^ 

An  interesting  letter  was  published  in  Farm  and  Eanch  of  June 
13,  1914,  by  C.  G.  Burkett  of  Collin  county,  Texas,  which  demon- 
strates the  fact  that  farmers  can  handle  their  economic  problems 
if  they  once  make  up  their  minds  to  do  so : 

"We  had  four  gins  in  Farmersville  up  to  last  summer.  They 
had  become  owned  and  controlled  by  the  local  mill,  or  at  least  the 
farmers  thought  so,  and  while  they  were  considered  very  good 
gins,  equal  to  the  average,  there  were  many  new  features  in  gin- 
ning cotton  that  added  to  the  grade  of  the  lint  that  these  gins  did 
not  have,  and  the  owners  did  not  feel  inclined  to  supply  them. 
The  farmers  also  felt  they  were  not  getting  the  full  value  of  their 
:seed  as  compared  with  other  sections.  They  could  see  no  way  of 
getting  the  best  results  except  by  going  into  business  for  them- 
selves. They  decided  to  build  a  first-class  gin  with  a  reinforced 
<3oncrete  building,  equipped  with  the  latest  machinery  to  cost 
$20,000.  About  one  hundred  and  fifty  farmers  and  a  few  busi- 
ness men  of  the  town,  who  were  known  to  be  outspoken  friends 
of  the  farmers,  took  about  half  of  the  stock  and  an  old  ijinner 

^Farmers'  Fireside  and  Bulletin,  December  3,  l^l.^. 


Gooperation  in  Agriculture^  Marketing,  and  Rural  Credit     38 

and  farmer  took  the  balance.  The  gin  was  completed  and  ginning 
begun. 

"The  first  unnecessary  evil  which  the  new  gin  eliminated  was 
to  prevent  an  advance  in  ginning  and  wrapping  of  seventy-five 
cents  p€r  bale.  It  was  soon  discovered  that  the  new  gin  was  turn- 
ing out  a  bale  that  sold  for  from  $10  to  $25  per  bale  more  than 
those  of  the  plain  gins.  This  at  once  compelled  the  other  gins  to 
put  in  improved  machinery. 

"They  estimated  the  grade  of  the  cotton  was  raised  at  least  $15 
per  bale.     This  was  correction  number  two. 

"They  had  their  seed  under  their  own  control  and  shipped  them 
for  about  $3.00  per  ton  more  than  they  could  get  at  home.  This 
was  evil  number  three. 

"There  were  about  8000  bales  raised  in  that  district;  the  bene- 
fits for  last  year  to  the  cotton  growers  was  nearly  $150,000.  The 
■dividend  was  forty-three  per  cent  on  the  stock. 

"Persuasion  or  petitions  would  not  have  had  any  effect  toward 
•correcting  these  evils,  but  getting  into  business  for  themselves 
where  reforms  were  needed  did  the  work.  Farmers  and  merchants 
-cooperated  together,  as  they  should,  and  got  results." 

There  are  many  farmers'  cotton  warehouses  throughout  the 
state,  successful  in  many  instances  and  failures  in  others.  Coop- 
-erative  cotton  marketing  has  also  been  tried.  One  of  the  most 
successful  cases  is  at  Scott,  Arkansas. ^ 


In  a  bulletin  of  this  size  it  is  impossible  to  describe  many  types 
•of  farmers  organizations.  So  far  we  have  only  discussed  consum- 
•ers'  and  producers'  organizations;  very  little  has  been  said  of  sell- 
ing of  cattle,  truck  or  other  farm  products.  This  will  be  treated 
more  fully  in  the  chapter  on  Marketing. 

Essentials  to  Success  in  Farmers'  Organizations 

The  farmers  of  Texas  in  many  places  feel  the  need  of  organ- 
ization but  do  not  know  how  to  go  about  it.  One  farmer  from 
Cameron   county   writes:     "I    am    convinced    that   many   of   our 

'St;e  proceedings  of  first  meeting  of  Southern  States'  Association  of  Mar- 
ketf?,  Bulletin  No.  36,  Texas  Department  of  Agriculture,  or  Progreaaire 
Fanner,  June  6,   1914. 


34  Bulletin  of  the  University  of  Texas 

troubles  in  this  line  may  be  averted  by  close  cooperation  through 
associations  throughout  the  state  and  1  believe  further,  that  the 
only  way  to  cure  the  evils  complained  of  is  through  a  system  oi 
training  by  well-organized,  well-officered  associations,  which  will 
eventually  teach  the  shippers  and  buyer  as  well,  the  importance  of 
and  the  benefits  to  be  gained  by  a  National  Bureau  of  Marketing/' 
In  the  chapter  on  Kural  Credits,  directions  are  given  as  to  the 
formation  of  a  Rural  Credit  Society.  The  principles  stated  there 
will  apply  in  general  to  the  formation  of  any  farmers'  organiza- 
tion, so  we  need  not  repeat  them  here. 

Leadership 

Leadership  is  a  large  factor  in  the  success  of  any  cooperative 
undertaking.  As  one  farmer  writes:  "It  is  not  a  question  of 
what  we  can  do,  it's  only  a  question  of  what  we  will  do,  and  what 
we  do  depends  upon  our  leaders.  If  they  are  men  who  have  the 
get-up-and-go  and  have  the  confidence  of  the  membership  we  can 
carry  out  all  our  undertakings  with  ease, — and  we  have  learned 
that  the  right  man  in  the  right  place  is  worth  forty  men  in  the 
wrong  place."^  Due  credit  must  be  given  to  the  Farmers'  Union 
in  the  matter  of  educating  the  people  to  work  together,  and  the 
leadership  of  their  men  in  the  formation  of  these  organizations. 

A  striking  example  of  what  a  leader  can  do  is  found  in  Pasa- 
dena, Harris  County.  There,  Mr.  Glasgow,  the  teacher  of  the 
Pasadena  school,  has  organized  a  strawberry  selling  association, 
composed  of  eighty  farmers.  They  employ  regularly  a  sales  agent 
at  $1000  per  year,  and  the  first  year's  business  amounted  to  $90,- 
000,  paying  fifty  per  cent  dividend  on  the  stock  and  leaving  $1800 
of  undivided  profits.  They  buy  their  own  crates  and  fertilizers, 
and  are  thinking  of  putting  in  a  cannery  to  take  care  of  the 
second-class  stuff  and  the  local  tomato  crop.  Mr.  Glasgow  is 
president  of  the  association  and,  besides  his  school  work  and  his 
work  as  president,  he  calls  together  the  farmers  on  the  last  Satur- 
day of  each  month  for  discussion  of  their  agricultural  problems 
and  country  life  improvement.  He  himself  has  a  farm  of  twenty- 
eight  acres  from  which  he  made  a  total  net  profit  of  $2100  in  one 

^Jarmers'  Fireside  and  Bulletin.  April  3,  1914. 


Codperation  in  Agriculture^  Marketing,  and  Rural  Credit     35 

year.     This  man  by  his  leadership  has  made  it  possible  for  the 
community  to  realize  its  possibilities. 

To  go  outside  of  the  state,  there  is  a  good  example  of  the  lead- 
ership of  another  school  teacher  who  organized  his  patrons  in  a 
Northern  Wisconsin  town  to  build  a  cheese  factory  and  a  cheese 
selling  association.  In  one  year  he  saved  the  people  of  his  corn- 
salary  of  $1500,  but  they  were  $300  aiiead  at  the  end  of  the  year, 
salary  of  $1055,  but  they  were  $300  ahead  at  the  end  of  the  year. 
These  two  examples  will  show  what  leadership  will  do  for  the 
community. 

Specialized  Industry 

Another  factor  in  the  success  of  farmers'  organizations  is  to 
have  a  specialized  industry  in  a  restricted  area.  This  is  especially 
true  where  we  have  a  producers'  association.  Whenever  farmers 
are  engaged  in  general  farming,  raising  no  particular  crop,  there 
is  generally  not  enough  interest  in  the  marketing  of  any  particular 
line  of  products  to  make  it  worth  while.  But  whenever  any  com- 
munity raises  a  sufficient  quantity  of  truck,  cotton,  vegetables,  or 
fruit  there  ought  to  be  no  reason  why  a  farmers'  organization  could 
not  be  formed  to  market  these.  Whenever  a  sufficient  number  of 
farmers  require  a  considerable  quantity  of  fertilizer  or  lumber  or 
any  other  product,  there  is  a  good  opportunity  for  the  formation 
of  a  buying  association.  The  same  principles  hold  in  the  forma- 
tion of  breeding  and  live  stock  selling  associations.  The  indus- 
try ought  to  be  in  a  small  area,  so  that  the  different  farmers  may 
know  each  other  personally,  and  so  that  the  cost  of  concentrating 
the  product  or  handling  it  is  not  too  great.  After  a  number  of 
local  organizations  have  been  formed  there  is  no  reason  why  there 
could  not  be  a  federation,  such  as  has  been  carried  out  in  the  Hood 
River  Y,alley,  where  the  famous  of  Hood  Eiver  apples  are  being 
marketed.  But  the  federated  organizations  ought  not  to  take  over 
the  functions  of  the  locals. 

Boohs  and  Auditing 

Another  essential  is  that  there  should  be  a  good  system  of  ac- 
counting, and,  furthermore,  the  books  ought  to  be  open  for  inspec- 
tion of  the  members  at  any  time.  The  Right  Relationship  Leasrue 
of  Minneapolis,  which  has  promoted  the  formation  of  cooperative 


36  Bulletin  of  the  University  of  Texas 

stores  in  the  Northwest,  insists  upon  proper  accounting  and  audit- 
ing of  the  accounts  of  the  stores  under  their  supervision.  In  fact, 
the  success  of  their  stores  is  largely  due  to  this  precaution,  but  in 
any  organization  there  ought  to  be  an  auditing  committee  and 
other  committees  who  have  the  authority  to  inspect  the  books  and 
supervise  the  business. 

Membership  Agreement 

Another  fundamental  is  that  there  should  be  a  well  defined 
membership  agreement,  and  every  one  should  sign  it  so  that  he 
may  know  exactly  what  is  required  of  him.  This  should  cover  all 
the  details  of  the  business,  and  in  order,  to  hold  members,  the 
constitution  or  by-laws  should  contain  some  provisions  for  hold- 
ing them  together,  or  there  will  be  danger  that  some  will  leave 
the  organization  and  break  it  up.  The  Cranberry  Association  of 
New  England  requires  the  sale  of  all  the  cranberries  through  the 
Exchange.  The  Walnut  Growers  of  California  fine  their  mem- 
bers $100  if  they  are  found  selling  outside  of  the  organization. 

Manager 

\A.  good  manager  is  essential  to  the  success  of  farmers'  organ- 
izations. There  is  a  good  illustration  in  connection  with  a  gen- 
eral store  in  southern  Iowa.  They  put  in  a  manager  whose  chief 
qualification  was  his  low  salary.  At  one  time  he  purchased  2000 
pairs  of  shoes  without  regard  to  whether  the  people  who  belonged 
to  the  organization  would  or  c-ould  wear  the  shoes.  The  purchase 
was  almost  a  total  loss.^     A  good  manager  must  be  a  well  paid 

^Marketing  and  Farm  Credits,  p.  90. 
man ;  one  who  is  willing  to  work  for  the  benefit  of  the  cooperative 
enterprise,  and  one  who  has  the  ability  to  handle  the  business  in 
question. 

After  employing  a  good  manager,  and  seeing  that  he  is  conduct- 
ing the  business  honestly,  it  is  necessary  to  let  him  manage.  Too 
often  the  members  of  the  organization  trouble  the  manager  with 
all  kinds  of  suggestions  and  feel  hurt  if  he' does  not  carry  out 
their  ideas.  The  manager  has  troubles  enough.  A  farmers'  ele- 
vator manager  told  us  that  he  was  "tired  of  his  job."  "If  I  have 
several  hundred  bushels  of  grain  on  hand  some  of  the  farmers  will 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     37 

come  in  to  tell  me  that  I  ought  to  sell  and  sell  quick,  for  grain  is 
going  down.  The  next  one  that  comes  will  tell  me  that  it  is  a 
shame  to  have  only  four  hundred  bushels  on  hand.  Grain  is  ris- 
ing and  we  ought  to  take  advantage  of  it.  I  listen  to  all  of  them 
and  do  as  I  please.  If  I  didn't  have  a  thick  skin  I'd  have  quit 
long  ago." 

If  the  manager  is  a  good  man,  keep  him  and  do  not  practice 
rotation  in  office.  One  of  the  reasons  for  the  failure  of  the  Iowa 
elevators  was  the  fact  that  the  farmers  passed  around  the  '^good 
jobs,"  as  they  called  it,  and  changed  the  management  every  year 
or  two.^ 

What  is  True  '"Cooperation  f 

In  the  first  few  paragraphs  of  this  chapter  it  was  stated  that 
there  is  a  great  deal  of  confusion  as  to  the  word  ^'^cooperation." 
So  far  we  have  discussed  the  principles  that  apply  to  farmers'  or- 
ganizations of  all  kinds.  There  is,  however,  a  form  of  business 
organization  which  is  the  purely  cooperative  type,  and  it  is  recom- 
mended by  the  American  Commission  that,  to  avoid  the  confusion, 
the  word  cooperation  ought  to  be  restricted  to  the  purely  cooper- 
ative enterprises.  Wisconsin  has  passed  a  cooperative  law  outlin- 
ing the  requirements  for  the  organization  of  such  companies.  This 
law  forbids  the  use  of  this  term  to  any  company  that  does  not 
comply  with  the  law  in  its  organization  or  methods  of  doing  busi- 
ness. In  the  same  way  the  Texas  Eural  Credit  Law  forbids  the 
use  of  the  name  to  any  banking  association  that  does  not  comply 
with  this  law. 

The  following  points  are  considered  as  fundamentals  in  truly 
cooperative  business  organizations:^ 

One  Man  One  Vote 

1.  There  ought  to  be  only  one  vote  to  one  man.  Cooperation 
is  a  combination  of  men,  and  not  dollars.  The  small  producers, 
or  consumers  ought  to  have  the  same  right  in  business  affairs  of 
the  organization  as  those  who  have  larger  shares  of  the  capital. 

^See  Cooperation  in  Agriculture,  G.  H.  Powell:  Cooperation  in  New 
England,  Ford :  Report  of  American  Commis.sion,  Senate  Document  261, 
part  I. 

Coulter,  Cooperation  Among  Farmers,  p.   121. 


38  Bulletin  of  the  University  of  Texas 

The  Right  Relationship  League  makes  this  one  of  their  funda- 
mental principles,  because  they  say  it  is  American  and  democratic, 
and  it  would  bo  just  as  well  to  allow  people  to  have  the  voting 
privilege  in  accordance  with  the  amount  of  property  they  held 
when  it  comes  to  a  national  election.  Some  organizations,  how- 
ever, allow  the  voting  privilege  in  proportion  to  the  amount  of 
produce  furnished  to  the  organization.  This  is  true  of  the  Cali- 
fornia Citrus  Fruit  Growers,  but  this  does  not  mean  the  same 
thing  as  being  allowed  the  privilege  of  voting  in  proportion  to  the 
liumber  of  shares  held. 

Limited  Number  of  Shares  to  Each  Member 

2.  The  number  of  shares  allowed  to  each  member  should  be 
limited  by  the  constitution.  The  Right  Relationship  League  does 
not  allow  more  than-  ten  shares  to  each  member.  The  Walnut 
Growers  of  California  limit  the  number  of  shares  by  saying  that 
there  shall  be  no  more  than  one  share  per  acre  of  walnut  trees. 

No  Proxy  Voting 

3.  There  ought  to  be  no  voting  by  proxy,  that  is  allowing  a 
member  to  give  his  vote  to  another  if  the  first  one  cannot  be  at  a 
meeting.  It  is  held  that  if  a  member  will  not  attend  a  business 
meeting  he  ought  to  lose  his  vote.  Besides,  proxy  voting  has 
many  faults  which  ought  not  obtain  in  a  cooperaive  organization. 

Ofily  Producers  as  Members 

4.  Only  those  who  are  interested  in  the  producing  or  consum- 
ing side  of  the  organization  ought  to  be  allowed  to  become  mem- 
bers. In  the  case  of  a  gin,  only  farmers  who  have  cotton  to  gin 
should  come  into  the  organization.  The  share  capital  of  the 
cooperative  creamery  ought  to  bo  held  by  the  patrons  who  are  fur- 
nishing the  milk.  This  principle  is  carried  out  by  the  Florida 
Citrus  Exchange  and  the  Walnut  Growers  of  California  who  have 
it  specifically  stated  in  their  constitution  that  only  producers  shall 
be  members.  In  fact,  one  of  the  reasons  for  the  failure  of  the 
'California  Citrus  Union  was  the  fact  that  others  were  allowed  to 
become  members  of  the  organization. 


Codperaiion  in  Agriculture,  Marketing,  and  Rural  Credit     39 

It  also  ought  to  be  stated  in  the  constitution  that,  if  a  man 
leaves  the  organization  to  go  into  some  other  business,  he  be  re- 
quired to  sell  his  stock  to  the  organization  itself,  which  can  then 
resell  it  to  some  other  producer.  This  will  prevent  the  stock 
from  falling  into  the  hands  of  non-producers  or  non-consumers. 
Furthermore,  it  will  prevent  a  man  from  being  a  stockholder  in 
two  rival  organizations.  Here  is  where  a  truly  cooperative  con- 
cern differs  from  the  method  of  organization  adopted  by  the  gins 
at  Anna  and  Hillsboro.^  These  allow  business  men  to  hold  stock 
in  the  organization  and  the  combination  of  farmers  and  business 
men  is  a  good  one  for  the  latter  have  been  loyal  leaders,  giving 
time,  money,  and  business  experience  to  the  enterprise.  But  if 
the  next  fundamental  point  in  cooperation  is  also  insisted  upon 
there  may  be  friction.     It  is  this: 

Division  of  Profits 

5.  All  profits,  above  a  reasonable  dividend  on  the  capital, 
should  be  divided  among  those  who  furnished  the  business  to  the 
association.  That  is  the  important  difference  between  a  joint 
stock  company  and  a  cooperative  concern — in  the  former  profits 
are  divided  among  the  stockholders  in  proportion  to  the  amount 
of  money  they  have  invested  in  the  stock,  in  the  cooperative  busi- 
ness the  profits  are  divided  in  proportion  to  the  amount  of  busi- 
ness furnished  by  the  members  after  a  reasonable  dividend  has 
been  paid  on  the  stock.  To  illustrate  this,  in  the  case  of  a  store 
run  under  the  plan  of  the  Right  Eelationship  League :  The  con- 
sumers pay  full  price  for  their  goods,  and  a  record  is  kept-ofthe 
amount  purchased.  First  the  interest  is  paid  on  the  capital  and 
a  sum  is  laid  aside  for  a  reserve  fund,  then  the  profits  are  di- 
vided up  among  the  consumers  according  to  the  amount  they  have 
purchased.  Suppose  a  ten  per  cent  profit  has  been  made.  Then 
a  man  who  has  purchased  $450.00  worth  of  goods  will  receive  a 
rebate  of  $45.00.  According  to  the  rules  of  these  stores,  custom- 
ers who  are  not  stockholders  get  half  as  much  rebate,  in  this  case 
five  per  cent,  or  $22.50. 

To   show   the   difference   between  the   ordinary   stock   company 

^Farm  and  Rancli,  May  2,   1914. 


40  Bulletin  of  the  University  of  Texas 

and  a  cooperatiye  concern  in  the  division  of  profits,  we  will  as- 
sume the  following  case: 

Suppose  a  $10,000  gin  is  built  and  there  is  no  limit  to  the 
number  of  shares  held  by  one  member  and  voting  is  by  shares. 
Mr.  A.  is  a  business  man  and  holds  twenty-five  skares.  Mr.  B. 
is  a  farmer  and  holds  one  share.  They  gin  3000  bales  at  $3.00, 
which  would  be  a  gross  income  of  $9000,  of  which  $2250  is  clear 
money.  They  lay  aside  a  reserve  of  $450,  leaving  $1800  to  be 
divided  among  the  stockholders,  a  dividend  of  eighteen  per  cent 
on  the  investment.  Mr.  A.  will  get  a  dividend  of  eighteen  per 
cent  on  $2500,  or  $4.50.  Mr.  B.,  eighteen  per  cent  of  $100,  or 
$18.     In  business  meeting  A.  has  twenty-five  votes,  B.  only  one. 

According  to  cooperative  principles  this  is  not  right.  The 
farmer  is  the  one  who  by  his  patronage  furnishes  the  business  by 
which  dividends  are  created.  It  is  true  the  capital  of  the  busi- 
ness man  ought  to  produce  the  usual  amount  of  interest,  but 
everything  above  that  does  not  belong  to  capital,  but  to  the  man 
who  has  produced  the  business.  Many  would  go  so  far  as  to  say 
that  all  the  profits  should  be  divided  on  the  basis  of  business  fur- 
nished and  this  is  practicable  where  the  cost  of  putting  up  the 
plant,  etc.  (the  physical  capital,  in  other  words),  is  small  as  in 
the  caee  of  a  purchasing  society. 

Leit  us  work  out  this  assumed  case  on  cooperative  principles, 
keeping  the  number  of  shares  the  same.  We  will  allow  eight  per 
cent  interest  on  the  capital.  Eight  per  cent  of  $10,000  would  be 
$800;  A.  with  his  twenty-five  shares  would  get  eight  per  cent  of 
$2500,  or  $200  interest;  B.  on  his  $100  would  get  $8.00.  Taking 
out  the  interest  on  the  stock  there  still  would  be  $1000  of  profits 
to  be  divided  in  proportion  to  the  business  furnished  to  the  gin. 
Suppose  B.  has  furnished  60  bales  of  cotton  which  is  one-fiftieth 
of  the  total.  Tlierefore,  he  would  be  entitled  to  one-fiftieth  of 
$1000,  or  $20.     The  two  compare  as  follows : 

Mr.  A.  Mr.  B. 

In  joint  stock  form — 

18%  of  $2500=:$450  18%  of  $100==$18 

In  cooperation  form — 

8%  of  $2500=:$200  .  8%  of  $100==$  8-f- 

$20  on  cotton  ginned=l 


Cooperation  in  Agriculture^  Marketing,  and  Rural  Credit     41 

This  still  looks  in  favor  of  A.,  but  in  a  purely  cooperative  con- 
cern the  number  of  shares  of  stock  would  be  limited  to  a  great 
deal  smaller  number  than  twenty-five  and  he  would  have  only  one 
vote,  no  more  than  B.  wifh  his  one  share.  Some  organizations 
might  exclude  A.  altogether. 

But  under  such  cooperative  arrangement  we  can  see  that  the 
non-producer  stockholders  would  feel  that  they  had  a  right  to 
object.  They  would  prefer  to  have  the  dividends  paid  upon  the 
capital,  but  according  to  cooperative  principles  if  they-  are  not 
furnishing  any  of  tke  business  out  of  which  dividends  are  created 
they, are. J^ot  entitled  to  the  profits  above  a  fair  return  on  the  capi- 
tal invested. 

Limited  Stock  Dividend 

6.  In  most  cooperative  concerns  the  interest  on  shares  is  lim- 
ited by  the  constitution  and  by-law^s,  as  has  been  explained  in  the 
example  given  above.  In  the  Cranberry  Exchange  of  New  Eng- 
land, six  per  cent  is  allowed  on  the  money  in  shares,  and  the  rest 
\>f  the  profits  are  divided  on  the  basis  of  business  furnished. 

Reserve  Fund 

7.  As  shown  in  the  above  example,  a  certain  reserve  fund 
should  be  set  aside  before  profits  are  declared.  This  is  very  im- 
portant, for  in  very  many  farmers'  organizations  nothing  is  set 
aside  for  repairs  or  depreciation,  and  the  results  are  that  they 
pay  enormously  high  dividends  for  the  first  few  years.  But  after 
awhile  the  bills  come  in  for  repairs  and  depreciation,  t^e  divi- 
dends drop  off,  and  in  fact  members  may  be  called  upon  for  as- 
sessments instead,  and  then  it  is  likely  that  the  organization  will 
be  broken  up.  One  of  the  reasons  for  the  failure  of  the  New 
England  creameries  is  the  fact  that  no  reserve  fund  was  laid 
aside.  The  Wisconsin  Cooperative  law  requires  that  all  institu- 
tions organized  under  that  law  must  have  a  reserve  fund.  They 
must  set  aside  ten  per  cent  of  their  net  profits,  until  this  amount 
is  thirty  per  cent  of  the  paid  up  stock,  after  that  five  per  cent 
must  be  set  aside  for  an  educational  fund  to  be  used  in  teaching 
cooperation. 

Judged  by  these  standards  there  are  not  many  farmers^  organ- 
izations in   the  United   States  that   are  truly  cooperative.     ''But 


42  Bulletin  of  the  University  of  Texas 

any  organization  of  this  kind  may  be  said  to  be  cooperative  in 
spirit  wlicn  it  is  managed  exclusively  with  a  view  to  giving  the 
farmer  a  better  price  for  his  butterfat  or  his  grain,  and  not  at 
all  for  tlie  purpose  of  securing  dividends  on  the  stock,"  says  T. 
N.  Carver.^     "If  the  stock  is  owned  by  farmers  and  if  each  share 

^Year  Book,  U.  S.  Department  of  Agriculture,  1913. 
of  stock  is  in  practice  limited  to  a  normal  rate  of  interest  and  all 
surplus  earnings  go  to-  the  farmers  in  the  form  of  better  prices; 
the  enterprise  is  cooperative  in  spirit,  even  though  its  form  be 
that  of  the  ordinary  profit-making  corporation. 

"However,  it  must  in  frankness  be  admitted  that  there  is  al- 
ways danger,  under  the  joint  stock  form  of  organization,  that  the 
cooperative  spirit  will  be  destroyed  and  the  organization  shifted 
to  the  profit-making  purpose.  In  a  creamery,  for  example,  if  one 
man  own  a  large  number  of  shares  and  very  few  cows,  or  none  at 
aJl,  he  will  naturally  be  more  interested  in  dividends  than  in  the 
price  of  butterfat.  If  a  majority  of  the  shares  are  owned  by  such 
men,  the  company  is  almost  certain  to  be  managed  in  the  interest 
of  dividends  rather  than  in  the  interest  of  the  price  of  butterfat. 
It  is  therefore  highly  desirable  that  the  form  of  organization  be 
such  as  to  prevent  this  result  and  insure  that  the  management 
shall  always  be  in  the  interest  of  the  producers.  Nevertheless,  so 
long  as  the  management  is  in  the  interest  of  the  producer,  it  is 
reasonable  to  list  such  an  organization  as  cooperative." 


CHAPTER  II 

MARKETING 

INTRODUCTION 

It  would  not  be  possible  to  discuss  in  one  short  chapter  all  of 
the  important  questions  in  connection  with  the  marketing  of 
farm  products.  Marketing  has  been  for  some  time  a  much  studied 
question  and  there  yet  remains  a  vast  amount  of  study  and  effort 
before  some  of  the  most  perplexing  difficulties  can  be  removed; 
The  purpose  of  this  chapter  will  be  to  show  some  of  the  conditions 
which  exist  at  this  time  in  our  own  state,  and  to  suggest  improve- 
ments and  solutions  which  may  be  offered  by  the  individual  farmer 
rather  than  by  government  action.  The  statements  made  here 
concerning  conditions  are  from  the  people  concerned.  The  chap- 
ter is  a  product  of  the  evidence  and  testimony  which  have  been 
given  to  us  by  farmers,  shippers,  merchants  and  dealers.  This 
information  has  been  obtained  either  by  correspondence  or  direct 
interview.  Naturally,  those  who  have  furnished  us  with  infor- 
mation have  also  given  us  much  personal  opinion.  Of  necessity 
much  of  this  is  omitted.  The  purpose  of  this  chapter  is  not  argu- 
ment except  as  the  experiences  of  the  producers  tell  their  own 
story.  Wherever  opinion  has  been  offered  or  scheme  of  solution 
by  the  government  proposed,  we  have  considered  the  same  and 
placed  it  where  those  concerned  with  law  making  may  have  access 
to  it  when  desired. 

Correspondence  and  interview  have  brought  us  charges  and 
counter  charges  of  fraud,  theft  and  dishonor.  But  producers, 
middlemen  and  consumers  all  make  mistakes.  Not  all  the  present- 
day  difficulties  could  be  based  upon  mistakes,  but  we  have  hesi- 
tated before  putting  into  print  the  charges  brought  in  many  cases 
and  some  of  them  will  not  appear.  Enough  is  given  in  these 
pages  to  show  that  the  widespread  dissatisfaction  of  the  farming 
class  has  a  very  solid  basis.  It  is  not  personal  opinion  but  a  de- 
duction from  facts  that  the  farmer  and  producer  markets  his 
wares  against  great  odds.  Conditions  in  many  places  are  chaotic. 
It  is  also  a  deduction  from  his  own  evidence  that  he  is  not  doing 


44  Bulletin  of  the  University  of  Texas 

what  he  should  to  remed}^  his  own  condition.  The  principles 
imderl3ang  what  he  should  do  have  been  suggested  in  the  previous 
chapter. 

The  conditions  and  times  demand  action.*  We  advise  a  cam- 
paign for  cooperative  marketing  because  it  has  succeeded.  It  will 
be  well  to  note  again  the  distinction  drawn  in  the  first  chapter 
between  true  cooperation  and  some  of  the  organizations  which 
have  paraded  under  its  name.  We  advise  cooperative  marketing 
in  the  second  place  because  it  will  eliminate  from  the  produce 
world  much  of  the  personal  antagonism  and  fraud  which  now  exist. 
It  will  show  that  men  in  certain  situations  are  victims  of  circum- 
Btances.  Methods  and  principles  will  be  studied  instead  of  per- 
sonalities. A  third  reason  for  advocating  cooperation  in  market- 
ing is  the  fact  that  it  will  make  students  of  the  producers.  To- 
study  the  market  is  to  find  out  what  to  produce,  how  much  to 
produce,  how  to  prepare  it,  and  where  to  dispose  of  it  to  the  best 
advantage.  There  are  many  other  facts  in  favor  of  cooperative 
action  and  prominent  among  them  is  that  it  is  a  method  within 
the  grasp  and  control  of  the  smallest  producers  as  well  as  largest 
and  there  need  be  no  wait  for  legislative  action  or  further  work 
on  the  part  of  those  not  actually  following  the  plow.  In  this 
way  private  initiative,  while  not  antagonistic  to,  may  yet  be  in- 
dependent of,  state  action.  Cooperation  will  eliminate  conflict 
by  making  useless  those  who  cause  it  in  the  marketing  world.  In 
time  legislative  action  will  assist  that  which  has  been  done  by  the 
producer  himself:  that  which  he  must  do  of  his  own  action 
whether  legislation  comes  first  or  second. 

Crops  and  Values 

During  the  past  year  nearly  five  thousand  farmers  have  had  an 
invitation  from  us  by  letter  to  give  information  on  marketing  con- 
ditions. Twice  five  thousand  and  more  have  had  a  direct  per- 
sonal invitation.  Out  of  the  hundreds  of  letters  which  we  have 
received,  we  tabulate  the  following  facts: 

Per  cent  of  Letters  in 
Products  Mentioned.  Which  Mentioned. 

Cotton    61 

Truck  and  vegetables 38§ 

Grains 17 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     46 

Per  cent  of  Letters  in 
Products  Mentioned.  Which  Mentioned. 

Corn    ]  G 

Live  stock   15 

Fruit    13g 

Poultry   and  eggs 13^ 

Dairy  products    : 9" 

Hay  and  feed 9 

Wool    3 

•  Pecans    3 

• 

The  eleven  classes  mentioned  include  nearly  all*  products  upon 
which  we  have  been  furnished  information.  There  is  an  average 
mention  of  about  two  products  per  letter.  Of  course^  this  does 
not  mean  that  these  farmers  have  an  average  of  only  two  products 
to  sell,  but  it  does  mean  that  they  have  only  that  many  which  they 
-consider  worthy  of  note  when  talking  about  marketing  problems. 
The  class  of  truck  includes  all  the  different  kinds  of  vegetables. 
The  grains  include  wheat,  oats,  etc.  Kaffir,  milo,  etc.,  go  under 
corn  or  feed.  All  other  products  are  very  scattering.  For  ex- 
ample one  mention  of  tobacco ;  one  of  sugar  cane ;  one  of  molasses ; 
and  five  of  honey  were  given.  It  is  worthy  of  note  that  even  in 
a  limited  number  of  letters,  grain,  corn  and  live  stock  stand  close 
together.  Also  that  dairy  products  and  hay  and  feed  are  tied  for 
•eighth  place. 

The  followinor  table  taken  from  the  last  census  shows  the  value 

o 

of  these  classes  of  products  for  the  year  1909 : 


Cotton  and   seed $188,673,954 

Truck  and  vegetables 12,122,255 

Grains    16,545,305 

Corn 50,564,618 

Live  stock    78,648,000 

Fruit    2,304,574 

Poultry   and  eggs 5,909,942 

Dairy  products    15,680,000 

Hay  and  feed 12,824,433 

Wool    ".  .  2,202,342 

Pecans    556,203 

It  will  be  seen  from  this  that  the  following  pages  contain  a 
discussion  of  the  marketing  of  all  our  principal  agricultural  prod-. 
ucts.     However,  they  are  not  discussed  in  the  order  of  their  value. 


46  Bulletin  of  the  University  of  Texas 

Grain 

As  is  well  known,  the  rice  producers  have  had  some  experience 
in  cooperation  or  association  work.  Rice  growers  say  freely  that 
by  association  they  have  secured  much  which  could  not  have  been 
obtained  by  individual  action.  What  can  be  done  further  is  well 
suggested  in  this  statement: 

"The  rice  growers  and  truck  growers  seem  to  be  having  trouble  in  buy- 
ing feed  which  they  do  not  raise.  .  .  .  The  rice  men  have  an  organ- 
ization for  selling,  which  handles  their  business  in  a  manner  satisfactory 
to  them,  but  have  failed  to  see  the  need  of  cooperation  in  buying.  To 
illustrate:  The  rice  farmer  has  very  little  land  suitable  for  feed  crops, 
so  he  has  to  buy  a  large  amount  of  feed;  in  fact,  the  larger  part  of  his 
expense  account  is  his  feed  bill.  If  the  grain  growers  were  as  well  organ- 
ized as  the  feed  or  grain  dealers,  they  could  sell  direct  to  the  rice  growers 
through  their  association  at  a  better  price  and  the  rice  man  would  buy 
food  cheaper.  Corn  has  not  sold  for  less  than  $1.00  per  bushel  for  a  long 
time,  and  often  at  $1.10  and  $1.15.  These  prices  are  not  governed  by  the 
price  the  farmer  gets.  In  talking  the  matter  over  with  my  neighbors 
who  grow  rice,  I  find  that*  they  are  hopeless  of  any  relief  from  the 
exactions  of  the  middlemen.  Good  table  rice  is  sold  by  our  local  rice 
mill  at  from  $3.50  to  $5.00  per  100  pounds,  yet  rice  retails  in  our  local 
stores  at  7^  to  8§  cents  per  pound.  Some  of  us  are  hoping  that  the  feed 
growers  will  organize  and  divide  the  profits  the  middlemen  now  get 
between  producer  and  consumer." 

The  rice  grower  wants  feed.  Here  is  the  man  with  the  feed. 
It  is  simply  a  question  of  get  together. 

"I  raise  corn,  cotton  and  grain,  the  principal  crop  being  oats.  Marketed 
15,000  bushels.  I  own  and  operate  a  farm  with  hired  labor,  doing  every- 
thing from  breaking  land  to  threshing  with  own  machinery.  ...  I  sold 
my  crop  through  local  dealers.  I  think  the  price  would  be  better  if  a 
more  direct  communication  could  be  had  with  the  consumer.  My  observa- 
tion is  that  our  local  buyers  buy  on  a  good  margin,  and  sell  to  other 
brokers  who  also  require  a  margin.  Commission  selling  is  very  rarely 
satisfactory  in  the  grain  business,  but  I  find  it  very  much  so  in  the  cattle 
business;  however,  in  the  latter  transaction,  your  prospective  buyer  is 
looking  at  your  wares,  while  the  displaying  to  a  buyer  of  fifteen  or  twenty 
cars  of  sacked  grain,  or  loose  grain,  would  be  quite  an  item  in  time,  space, 
expense,  etc.,  and  after  all  the  satisfactory  handling  of  farm  products 
through  the  channel  of  commerce  to  the  consumer  will  remain,  as  a  rule, 
an  unsatisfactory  business  transaction." 


Cooperation  in  Agriculture^  Marketing^  and  Rural  Credit   '47 

Hay  and  Feed 

Closely  related  to  the  grain  market  is  the  market  for  hay  and 
other  feed  stuffs.  Opinion  is  about  evenly  divided  as  to  satisfac- 
tion and  dissatisfaction  in  buying  and  selling. 

In  one  case  where  satisfaction  has  be^n  had  the  selling  has 
been  done  through  an  association.  The  large  amount  thus  handled 
has  attracted  more  buyers.  The  association  manager  received  the 
bids  from  the  buyers  and  the  producer  accepted  or  rejected  any 
.bid.  This  has  been  found  effective  in  keeping  the  price  up  to  the 
quoted  market.  Weekly  meetings  were  held  for  the  purpose  of 
discussing  the  market  and  "the  spineless  ones  were  worked  with 
until  a  better  system  of  marketing  could  be  worked  out.''  Suc- 
cess in  this  case  has  been  due  largely  also  to  the  fact  that  a  ware- 
house was  constructed.  Now  the  product  is  sold  as  a  whole: 
grading  is  easier  and  the  buyer  does  business  with  the  association 
as  if  it  were  one  man.  The  association  sells  only  in  car  lots  and 
therefore  does  not  have  direct  connection  with  the  consumer. 

Another  alfalfa  association  has  trouble  in  reaching  the  small 
consumer  because  so  many  people  want  to  do  business  on  reference 
only.  The  distande  over  which  some  hay  must  be  shipped  makes 
all  personal  contact  between  buyer  and  seller  impossible  and  thus 
the  large  buyer  has  the  advantage  over  the  smaller.  It  is  sug- 
gested that  greater  security  could  be  had  with  some  kind  of  mar- 
ket supervision.  At  this  time  the  safe  way  seems  to  be  through 
the  association,  even  for  a  man  who  produces  as  much  as  150  tons 
of  alfalfa  and  25,000  pounds  of  seed  in  one  year. 

The  price  of  unorganized  effort  is  stated  in  the  following  com- 
ment: 

"Hay  season  comes  and  the  town  is  filled  with  hay  wagons.  Dull  time 
with  the  town  people;  a  few  grain  men  buy  it  at  $8.00  or  $9.00  a  ton, 
store  it,  and  in  the  winter  sell  it  at  50  cents  a  bale,  or  $16  to  $18  per  ton." 

With  regard  to  this  condition  the  question  naturally  arises, 
did  the  grain  men  come  firs-t  or  did  they  come  second  ?  If  second, 
then  the  producer  must  have  been  waiting  for  a  market.  Here  is 
one  producer  who  found  out  in  time: 

"The  bundled  feed  was  loaded  on  wagons  and  hauled  to  be  sold  to  any 
ohance  buyer  who  might  happen  along.  I  quit  selling  such  feed  because 
marketing  consumed  too  much  time,  and  because  ultimately  that  kind  of 


if  «•  rwmmmtf  ^  T, 


-j»i»3 


ISkt 


JIN-t* 


oali' 


a  wmr  c: 


'H^mmmM 


«f  Si 


^n-r-rrfif  m  <  -/rv-fe'f/Kr^    Jfcrcv^'^-s.ff    Ofi^  Svrtkl  Cre&t     ^ 


^0  Bulletin  of  the  University  of  Texas 

profits  and  the  commissions  of  the  commercial  world  for  so  doing  ? 
To  those  who  cannot  produce  their  own  feed,  there  is  as  much  to 
be  said  on  the  side  of  unplanned  and  unorganized  buying  as  there 
is  to  those  on  the  side  of  helter-skelter  selling. 

Corn 

With  corn,  as  with  hay  and  feed,  although  local  supply  does  not 
equal  our  demand,  the  producers  are  about  equally  divided  as  to 
whether  marketing  is  satisfactory  or  otherwise.  Prices  vary  with 
local  conditions.  For  example,  out  of  the  first  half  dozen  letters 
glanced  at  the  following  prices  are  quoted :  Eighty  cents  in  shuck ; 
$1.00  a  bushel;  seventy  cents  in  shuck;  whatever  the  merchant 
says  it  is  worth.  The  dollar  corn  was  sold  to  neighbors.  The 
seventy-cent  corn  was  reported  satisfactory  with  a  yield  of  35  to 
40  bushels  per  acre. 

One  letter  reports: 

"Ten  loads  of  corn  will  glut  the  market  in  Paris  and  prices  go  down 
15  to  25  cents  per  bushel,  and  the  same  thing  with  oats." 

The  next  one  says: 

"Corn  is  never  considered  a  product  for  the  market  in  East  Texas  coun- 
ties from  the  fact  that  it  consumes  all  the  grain  crops  at  home,  Tliis 
country  buys  corn  every  year." 

The  solution  of  high  prices  and  low  prices  in  these  two  com- 
munities by  their  getting  together  in  organized  exchange  is  easy. 
One  correspondent  says: 

"I  have  bought  from  the  dealer  at  75  cents  per  bushel,  seventy-two  pounds 
for  a  bushel,  cash,  in  spring,  and  sold  better  corn  the  coming  fall  at  25 
cents  per  bushel  of  seventy-five  pounds  for  a  bushel." 

Perhaps  so,  but  this  does  not  mean  that  the  farmer  paid  too 
much  nor  that  he  received  too  little.  No  one  had  corn  in  the 
spring  perhaps,  except  the  dealer.  One  seller  and  many  buyers 
mean  high  prices.  In  the  fall  it  was  one  buyer  and  many  sellers, 
hence  low  prices.  In  addition  to  this  fact  we  must  remember  that 
the  value  of  an  agricultural  product  depends  largely  upon  where 
it  is,  and  what  time  it  is  there. 

Since  corn  is  usually  regarded  as  a  grain  and  is  a  large  item 


Cooperation  in  AgricnUure,  Marketing^  and  Rural  Credit     51 

in  feedstuffs,  what  has  been  said  above  on  grain  and  feedstuff?^ 
applies  also  in  the  case  of  corn. 

Marketing  of  Live  Stock 

Among  the  farmers  who  have  given  us  information  concerning- 
tlie  marketing  of  live  stock,  there  is  about  one  satisfied  seller  to- 
two  dissatisfied  sellers.  One  satisfied  seller  says  that  he  sold  60 
Jersey  cows  this  year  at  a  good  price  and  that  he  did  this  by  ad- 
vertising. This  man,  of  course,  is  more  than  an  average  pro- 
ducer; he  is  (just  the  same  as  the  cattlemen)  in  a  specialized 
business.  The  majority  of  our  correspondents  belong  to  the  class 
of  general  farmers.  The  following  comment  applies  to  the  ma- 
jority of  the  producers  who  have  written  us: 

"I  have  a  few  fat  hogs  for  sale.  Our  local  dealer  offers  me  6J  cents^ 
live  weight.  He  sells  pork  from  16  to  20  cents.  Of  course,  I  could  do 
better  by  selling  to  San  Antonio  or  Fort  Worth  packers,  but  I  have  no 
carload.  Through  the  medium  of  our  Farmers'  Institute  I  tried  to  organize 
clubs,  but  the  farmers  won't  organize." 

Another  case  is  that  of  the  producer  who  has  several  thousand 
acres  of  pasture,  and  half  as  much  land  in  cultivation.     He  says: 

"We  market  cattle,  sheep,  hogs,  horses  and  mules,  and  these  consume 
most  of  the  rent  feed  on  the  place.  What  feed  there  is  left  is  disposed 
of  locally,  and  the  selling  becomes  a  personal  proposition  of  salesmanship. 
The  fat  stock  shipped  to  market  is  handled  in  a  satisfactory  manner  by 
the  live  stock  commission  companies.  There  is  so  much  competition  be- 
tween these  concerns  that  there  is  a  constant  incentive  to  better  sales.  On 
the  whole,  we  have  no  fault  to  find  with  the  present  system  of  marketing- 
stock  and  wool." 

Here  is  another  case  of  the  producer  who  is  above  the  average: 

"I  market  about  $4000  worth  of  hogs  of  my  own  raising  for  some  years, 
and  find  that  selling  through  commission  men,  mostly  at  Fort  Worth  and 
Oklahoma  City,  has  been  satisfactory,  though  the  slow  movements  of  trains, 
that  is,  the  long  stops  and  lay-overs,  caused  heavy  shrinkage,  but  in  justice 
to  the  railroads,  will  say  that  though  I  have  lost  from  that  cause,  I  have 
never  put  in  a  claim  that  was  not  settled  without  suit.  All  feed  stuff  was 
consumed  on  the  farm,  but  poultry  was  never  sold  for  a  fair  price  except 
in  a  few  cases  where  I  sold  to  a  man  trying  to  load  a  car.  My  hogs  were 
finished  for  the  packer;  my  poultry  the  same.  To  the  man  who  does  not 
expect  too  much,  I  believe  cattle .  and  hogs  are  pretty  well  handled  if  the 
loading  stations  were  forced  to  furnish  water  for  the  stock  at  each  and: 


52  Bulletin  of  the  University  of  Texas 

every  station  when  they  are  handled.  I  have  been  forced  to  haul  water 
a  long  distance  at  heavy  expense  to  water  stock  after  a  long  drive  before 
I  could  load,  as  it  would  be  twenty-four  hours  before  I  could  compel  the 
road  to  water." 

.  With  regard  to  shipping  facilities,  and  accommodations  fur- 
nished by  the  railroad,  opinion  is  divided,  but  the  majority  believe 
that  this  phase  of  the  marketing  situation  is  fairly  satisfactory. 
It  is  to  be  regretted  that  so  little  is  said  concerning  the  quality 
of  the  product  sold.  Very  little  mention  is  made  of  improve- 
ment in  breed  or  an  attempt  to  furnish  high-grade  stuff.  There 
is  much  criticism  of  the  difference  that  exists  between  what  the 
producer  gets  in  the  local  market  and  what  the  consumer  pays 
at  the  local  meat  market.  Little  comment  is  made  upon  losses 
which  must  be  incurred  in  transforming  the  product  on  the  hoof 
into  a  finished  meat  product.  Most  of  this  kind  of  criticism 
comes  from  those  who  have  had  a  very  small  amount  of  product 
to  sell.  In  one  case,  there  is  criticism  because  certain  local  deal- 
ers have  bought  up  cows,  and  after  keeping  the  same  for  a  cer- 
tain number  of  weeks,  have  doubled  their  money.  It  would  ap- 
pear that  such  criticisms  are  unjust.  The  writer  knows  of  sev- 
eral cases  where  such  local  buyers  have  built  silos,  and  have  sim- 
ply finished  out  the  cattle  in  the  way  that  the.  small  producer 
could  not  or  did  not  want  to  do  it.  This  is  legitimate  business. 
The  writer  has  in  mind  one  case  of  an  Indiana  farmer  who  bought 
fifty-thre€  head  of  calves  out  of  the  Texas  market,  and  after  keep- 
ing them  for  a  few  months,  during  the  winter  season,  on  a  little 
pasture,  wheat  straw,  and  silage,  sold  to  a  profit  of  about  $1300. 
The  calves  were  finished  to  top  the  Indianapolis  market.  It 
appears  that  this  is  a  case  of  regret  not  open  for  criticism  except 
that  the  feeding  out  was  not  done  in  the  State  of  Texas. 

Among  the  difficulties  that  a  certain  man  w^ho  sells  from  400 
to  500  sheep,  and  200  to  300  head  of  cattle  a  year  or  more,  has 
to  deal  with,  are  given  the  following:  First,  although  commis- 
sion men  are  men  of  ability,  their  charges  are  high;  second,  that 
the  price  is  controlled  by  a  very  few  firms;  third,  that  when  hay 
is  fed  in  the  pen,  that  it  is  sold  at  a  high  price.  Several  examples 
are  given  to  show  the  wide  margin  which  exists  between  prices  in 
the  local  market  and  the  large  city  market.  This  point  is  brouglit 
out  along  another  line  by  the  turkey  market.     This  letter  eViows 


Cooperation  in  Agriculture^  Marketing,  and  Rural  Credit     53 

that  cooperative  action  could  be  applied  to  advantage.  It  is  the 
testimony  of  a  woman :  "I  thought  I  would  raise  turkeys,  but 
there  is  no  market  here  and  by  the  time  I  shipped  them  to  Shreve- 
port,  paid  the  express  and  commission  there,  I  could  not  afford  to 
raise  fowls^  so  have  turned  my  attention  to  raising  cattle.'^ 

Word  from  the  sections  of  the  State  that  are  classed  as  cattle 
country  indicates  that  there  would  be  a  much  greater  production 
of  cattle  by  the  smaller  producers,  or  general  farmers,  and  there- 
fore the  men  who  do  not  care  to  go  extensively  into  the  cattle 
business,  if  the  rates  of  interest  on  cattle  loans  were  not  so  high. 
And  if  the  small  producer  could  have  equal  opportunity  with  the 
men  who  specialize  in  cattle.  The  following  paragraph  comes 
like  a  breath  of  the  open  air: 

"I  am  making  my  living  on  the  safe  and  sure  plan  by  keeping  milch 
cows  and  hogs,  and  running  them  on  green  pasture  all  the  year.  Fat  hogs 
and  cream  is  always  a  good  price  and  sure  market.  I  have  my  farm 
fenced  off  in  fields  and  plant  only  one  kind  of  crop  in  a  field,  and  when 
the  crop  is  gathered  I  open  the  gate  and  turn  in  the  cows  and  they  clean 
up  the  field,  stalks,  weeds,  grass,  and  everything,  and  have  the  field  ready 
for  the  plow,  and  make  cream  enough  to  pay  all  our  running  expenses." 

After  reading  the  testimony  of  both  sides,  one  is  almost  ready 
to  agree  with  the  "P.  S."  added  by  an  earnest  correspondent : 

"The  person  that  solves  the  marketing  question  satisfactory  to  both  the 
buyer  and  seller  must  possess  wisdom  that  would  make  Solomon  look  like 
30  cents." 

Dairy  Produots 

The  rapidity  with  which  silos  are  being  introduced  bespeaks  an 
early  increase  in  the  amount  of  dairy  products.  In  other  states 
the  farmers  in  many  localities  have  had  their  first  experience  in 
cooperation  through  the  creamery.  In  Texas,  this  has  been  a 
neglected  business.  What  products  have  been  produced  have  de- 
pended largely  upon  local  markets  and  fluctuating  prices.  The 
future  promises  better  prices  and  the  government  by  giving  us  the 
parcels  post  has  aided  most  in  bringing  about  that  situation  whiere 
producer  and  consumer  can  get  together.  Opinions  may  differ, 
but  actual  experiences  in  marking  dairy  products  by  parcels  post 
seem  to  be  entirely  satisfactory. 

"My  butter   netted   me  25   cents  by   parcels   post.     At   the   same    season 


54  Bulletin  of  the  University  of  Texas 

our  country  stores  were  paying  12i  cents  per  pound.  I  save  all  my  syrup 
buckets,  mould  butter  in  brick,  wrap  with  bought  butter  paper  as  I  mould. 
This  paper  keeps  the  butter  fresh  for  quite  a  while." 

"Since  the  parcels  post  has  been  in  vogue  we  can  get  35  cents  per  pound 
for  butter,  when  the  local  market  pays  only  15  cents." 

"I  market  2000  to  4000  pounds  of  butter  or  butter  fat  and  30,000  to 
50,000  pounds  of  milk  annually.  First  I  sold  through  creameries  and  later 
found  it  more  satisfactory  and  profitable  to  manufacture  my  own  butter, 
and  under  the  new  parcels  post  laws  find  it  very  satisfactory,  selling  to 
city  customers  200  to  300  miles  distant." 

Some  opinions  do  not  agree  with  what  has  actually  been  clone. 

"We  also  sell  about  $400  worth  of  butter  every  year,  at  from  27  to  30 
cents  per  pound.  The  merchants  seem  to  have  a  set  price  to  pay  for 
butter.  They  think  that  25  cents  is  all  they  should  pay  for  it.  It  seems 
to  me  that  the  butter  maker  should  be  in  touch  with  the  butter  eater. 
There  is  so  much  red  tape  about  mailing  butter  that  we  think  it  won't  pay. 
People  want  it  fixed  very  secure.  Our  butter  is  very  firm  and  solid.  We 
use  a  separator  and  make  the  butter  out  of  cream.  Butter  made  from 
cream   is  superior  to  butter  made  from  milk." 

Of  course,  there  is  "red  tape'^  about  it.  But  red  tape  m  this 
case  is  worth  money.  It  is  the  customer  who  demands  the  best 
and  that  best  served  to  him  in  the  way  he  wants  it  who  is  worth 
while.  The  producer  who  tries  to  satisfy  a  want  stands  a  better 
show  to  get  his  money  than  the  producer  who  tries  to  make  a  con- 
sumer want  something  else.  The  producer  can  determine  tlie 
character  of  the  supply  but  the  consumer  determines  the  character 
of  demand.  He  expresses  his  opinion  in  terms  of  money.  Xote 
how  it  is  brought  out  in  the  following  eases : 

'T  have  marketed  during  the  present  year  about  200  pounds  of  butter 
to  my  local  people,  they  being  the  actual  consumer,  receiving  25  cents 
per  pound,  or  a  total  of  $50,  which  has  been  very  satisfactory  to  me  under 
existing  circumstances.  Our  butter  was  moulded  in  one-pound  moulds  and 
wrapped  carefully  in  tissue  paper,  delivered  direct  to  our  customers  by 
someone  on  the  farm  two  or  three  times  a  week." 

"We  are  planning  to  build  up  a  herd  of  Jersey  cattle.  We  are  eight 
miles  out.  At  first  I  tried  selling  skim  milk,  buttermilk,  eggs,  and  butter 
direct  to  consumer  by  making  three  trips  a  week.  Prices  were  fair.  The 
round  trip  over  a  scattered  town  \^Jas  too  much  for  man  and  team,  and 
my  customers  often  moved  without  leaving  their  addresses,  so  that  I  would 
lose   small   bills    in   that   way.     We   found   that   plan   unsatisfactory.     We 


Cooperation  in  AgricuUure,  Marl-cting.  and  Rural  Credit     55 

then  began  selling  butter  to  our  groceryman  at  25  cents  per  pound.  We 
got  nice  cartons,  put  our  butter  up  in  neat  packages  with  trade  name, 
character  of  contents,  and  maker's  name  printed  on  outside.  People  learned 
our  trade  name  and  our  butter  became  popular.  The  price  gradually  rose, 
until  we  have  received  35  cents  per  pound  all  the  year  of  late.  Our  gro- 
ceryman always  sells  the  butter  at  5  cents  more  per  pound  than  he  gives 
us.  This  is  satisfactory  all  around,  as  much  as  any  plan  can  reasonably 
be  expected  to  be.  Of  course,  if  we  made  much  butter  we  might  be  unable 
to  sell  it  for  quite  so  much  a  pound.  Our  groceryman  will  have  bought 
alx)ut  $850  worth  of  butter  from  us  this  year  when  this  month  has  passed; 
the  demand  is  so  great  that  it  causes  the  clerks  some  trouble  to  decide  who 
shall  have  our  butter  when  the  number  of  pounds  available  varies.  We 
expect  to  market  eggs  the  same  way,  and  have  cartons  ready,  but,  alas! 
not  the  eggs.      (Price  of  the  butter  is  cash.)" 

The  following  case  seems  to  present  a  problem  which  has  been 
met  successfully  by  parcels  post.  But  even  at  the  lowest  figure 
mentioned  butter  is  perhaps  more  profitable  than  most  of  the 
staple  products : 

"Our  butter  netted,  or  rather  brought,  us  30  to  35  cents  per  pound  so 
long  as  local  demand  consumed  the  local  supply.  When  local  supply 
exceeded  local  demand,  we  got  only  17  or  18  cents  per  pound.  We  sold 
to  the  local  merchants,  preferring  to  do  this  rather  than  make  deliveries 
with  so  few  pounds.  Creamery  butter  throughout  the  time  we  have  been 
here — three  years — has  never  been  below  30  cents.  One  of  our  neighbors 
made  deliveries  for  35  cents  all  the  time,  her  customers  preferring  her 
butter  to  the  creamery  product." 

In  certain  places,  there  are  charges  of  unfairness  against  the 
creameries  in  the  making  of  tests.  In  cases  of  this  kind  the  farm- 
ers in  many  sections  of  the  country  have  simply  started  their  own 
creameries  on  the  joint  stock  or  cooperative  plan. 

In  general  the  marketing  of  dairy  products  is  satisfactory. 
Prices  quoted  are  usually  high  compared  to  prices  in  other  sec- 
tions of  the  country.  The  regret  is  that  the  dairy  business  should 
have  such  a  small  development. 

Poultry  and  Eggs 

The  selling  of  poultry  and  eggs  is  usually  closely  connected 
with  the  selling  of  dairy  products.  So  far  as  the  producer  is  con- 
cerned the  market  is  in  most  instances  local  but  the  parcels  post 
is  modifying  this  the  same  as  in  the  case  of  dairy  products.     Re- 


^6  Bulletin  of  the  University  of  Texas 

cently,  there  came  to  our  office  by  parcels  post  a  test  shipment  of 
one  dozen  eggs  from  Long  Island,  New  York.  The  eggs  and  paste- 
board package  were  in  perfect  condition  when  they  arrived.  Par- 
cels post  eliminates  all  middlemen  by  substituting  the  postage 
stamp.  Here  cooperation  is  not  needed  on  a  large  scale  because 
there  is  a  direct  relation  between  ])roducer  and  consumer. 
Dressed  poultry  can  be  handled  in  the  same  way.  It  appears  to 
us  that  the  government  by  giving  the  producer  and  consumer  the 
parcels  post  has  given  them  the  solution  for  every  problem  men- 
tioned in  the  following  case : 

"We  have  marketed  several  hundred  eggs,  for  which  we  have  received 
an  average  of  15  cents  per  dozen  only;  sold  to  local  dealers  and  consumers. 
Eggs  were  gathered  up  eveiy  day  and  carried  to  market  twice  a  week. 
The  price  received  was  not  very  satisfactory.  Have  recently  sold  on  the 
local  market  four  dozen  hens  to  a  local  dealer,  who  is  buying  and  ship- 
ping, only  paying  5  cents  per  pound,  and  I  notice  hens  are  quoted  in 
Houston  and  other  cities  at  11  and  12  cents  per  pound.  From  these 
figures  it  seems  that  somebody  must  be  getting  something  for  nothing; 
the  producer  is  not  getting  the  worth  of  his  poultry,  and  the  consumer 
is  paying  a  long  price  for  what  he  gets,  the  producer  getting  5  cents  per 
pound  for  his  hens,  or  about  22  to  25  cents  per  hen,  and  the  consumer 
paying  12  cents  per  pound.  What  poultry  (that  is,  hens)  that  go  on  his 
table  at  50  ta  60  cents  per  hen,  or  more  than  as  much  again  as  the  pro- 
ducer gets,  cannot  be  satisfactory  with  the  producer  or  consumer." 

In  our  effort  to  get  at  marketing  conditions,  we  have  welcomed 
information  from  merchants  and  dealers: 

"To  give  you  an  illustration  of  marketing  of  poultry,  I  give  you  below 
some  figures  which  may  prove  interesting.  Suppose  I  pay  the  producer 
$3.00  per  dozen  for  two  dozen  chickens,  which  is  about  what  the  average 
shipping  coop  contains,  and  consign  them  to  an  honest  commission  man 
in  San  Antonio.     Here  are  the  results: 

Sold  by  commission  man  for  $4.25  per  dozen $  8  60 

Commission,  85  cents;  express,  $1.00 1  85 

Net    to    shipper $  6  65 

Bought  by  retailer  for  $4.25  per  dozen $  8  50 

Sold  by  retailer  for  45c  each 10  80 

Difference  between  cost  and  selling  price 4  80 

So  you  can  see  how  this  expense  runs  up  on  a  small  item  right  at  home, 
we   might  say.     The  selling  expense  on  two  dozen   chickens  is  $3.80   and 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     57 

the  transportation  expense  is  $1.00,  which  don't  look  reasonable,  but  it 
is  a  fact,  nevertheless,  and  I  believe  that  I  am  putting  it  a  little  mild. 
,  .  .  Now  you  will  ask  why  don't  the  producer  ship  his  own  produce? 
He  would  if  he  wasn't  afraid  of  being  skinned.  He  has  no  confidence  in 
the  commission  man,  where  he  would  have  if  the  government  was  behind 
it  to  assure  him  a  square  deal,  and  the  same  chicken  that  he  got  only 
25  cents  for  could  net  him  that  under  my  plan  and  go  to  the  consumer 
at  a  little  better  than  30  cents,  or  give  the  producer  30  cents  and  charge 
the  consumer  a  little  better  than  35  cents,  and  you  would  please  both 
of  them." 

In  other  words,  this  means  that  the  farmer  receives  $6.00  for 
2  dozen  chickens,  and  the  consumer  paid  $10.80.  Who  got  the 
difference  of  $4.80?  The  shipper  got  65  cents;  the  commission 
men,  85  cents;  the  express  company,  $1.00;  the  retailer,  $2.30. 
If  the  retailer  fed,  he  received  $2.30  minus  the  cost  of  the  feed. 
In  no  case  was  the  profit  excessive.  The  trouble  was  that  there 
were  four  parties  standing  between  the  farmer  and  the  consumer. 

Fruity  Truck,  and  Vegetables 

The  marketing  of  perishable  produce  presents  more  problems 
than  any  other  phase  of  the  marketing  question.  These  problems 
are  due  to  many  causes  but  discussions  at  this  time  and  place 
must  be  brief.  It  appears  at  times  as  if  the  whole  vexatious  con- 
dition was  the  result  of  the  action  of  some  middleman  or  agency. 
In  general  this  is  by  no  means  the  case. 

In  order  to  get  a  better  understanding  of  tlie  situation  and 
conditions,  and  to  show  how  some  of  the  problems  may  be  solved, 
we  shall  devote  our  attention  to  such  questions  as :  preparing  for 
the  market ;  difficulties  which  confront  the  commission  men ; 
troubles  met  with  in  following  a  policy  of  consigning;  difference 
between  price  paid  by  consumer  and  what  was  received  by  the 
producer;  how  home  canning  may  help  and  what  can  be  expected 
from  cooperation. 

It  should  be  remembered  that  the  Texas  farmer  has  no  monop- 
oly in  the  production  of  early  perishable  produce.  On  the  con- 
trary, after  the  very  earliest  part  of  the  season  his  products  must 
compete  with  those  from  other  states  having  a  similar  climate 
To  obtain  and  hold  a  market,  the  product  must  compare  favorably 
with  the  products  from  other  sections  as  to  grading,  packing,  ap- 


58  Bulletin  of  the  University  of  Texas. 

pearance,   etc.     On   this   point,   a    volume   could   be  written.     A 
dealer  gets  at  the  vital  points  in  the  following  way : 

"The  marketing  problem  is  one  that  requires  long  experience  in  locating 
reliable  houses,  closely  watching  the  markets,  keeping  posted  by  wire  daily 
or  oftener.  knowing  what  you  can  safely  expect  as  a  safe  risk,  buying 
only  the  best  stock,  and  it  properly  packed,  establishing  a  reputation  for 
fair  dealing,  and  living  up  to  your  agreements." 

This  dealer  has  not  only  given  the  producer  a  glance  at  the 
middleman's  business,  but  he  has  also  indicated  what  would  pay 
the  producer  best. 

Where  there  is  cooperation  to  the  extent  that  small  producers 
combine  in  loading  a  car,  there  many  difficulties  arise.  These 
represent  the  troubles  which  arise  even  if  there  were  no  middle- 
men concerned. 

"Farmers  have  failed  to  learn  the  lesson  of  grading  and  paeking,  and 
as  all,  farms  in  this  section  are  too  small  for  carload  shipments  singly, 
they  have  to  join  in  loading,  and  the  quality  of  the  car  is  judged  by  the 
product  of  the  most  belligerent  man  permitted  to  load.  Personally,  I 
have  suffered  considerable  loss  from  this  cause,  especially  in  sweet  potatoes 
and  cabbage,  where  inferior  stock  passed  the  inspector,  or  where  sweet 
potatoes  were  not  sufficiently  seasoned  to  stand  shipment.  I  have  known 
instances  where  entire  carloads  of  sweet  potatoes  have  been  lost  because 
of  the  loading  of  a  few  sacks  of  freshly  dug  potatoes,  generally  because 
someone  had  made  a  short  estimate  of  car  capacity  and  the  inspector 
would  permit  these  to  be  placed  in  the  car  to  fill.  Of  course,  the  chance 
was  that  they  would  spoil  before  reaching  destination,  and  being  the  last 
loaded  they  are  the  first  inspected  on  opening  the  car,  and  as  a  result 
the  entire  car  is  rejected." 

"There  were  1500  or  more  crates  of  beans  shipped  from  this  place  last 
spring  and  two-thirds  or  more  were  packed  in  very  poor  condition.  Many 
were  refused  by  commission  men,  or  prices  were  very  poor." 

The  principles  of  quality,  culling,  grading,  testing,  packing, 
etc.,  form  a  science.  To  disregard  these  things  is  just  as  disas- 
trous as  to  have  no  knowledge  of  transportation  rates,  lack  of  in- 
formation as  to  the  amount  of  product  in  the  market  to  which 
products  are  sent  or  dealing  with  catch-as-catch-can  commission 
men. 

In  the  marketing  of  perishable  produce,  not  all  of  the  troulile 
is  on  the  producer's  side.  As  a  matter  of  fact,  it  is  quite  likely 
that  the  greater  part  of  the  trouble  originates  with  the  ])roducer. 


Cooperation  in  Agriculture^  Marketing^  and  Rural  Credit     59 

The  middleman  has  his  side  of  the  question: 

"My  experience  is  confined  to  cantaloupes  and  potatoes,  and  I  lay  the 
greater  part  of  the  trouble  to  the  farmer.  As  to  the  cantaloupes,  I  handled 
two  cars  a  year  or  two  ago,  when  I  first  got  what  I  thought  and  what 
was  recommended  to  me  as  an  expert  packer  to  come  and  pack  same  for  me. 
He  had  considerable  trouble  with  the  farmers  trying  to  put  off  any  cla-ss 
of  stuff  on  him  just  to  get  rid  of  it,  and  I  consider  this  one  of  the  hardest 
points  to  overcome.  I  took  the  two  cars  to  Kansas  City  and  spent  two 
weeks  right  in  the  market.  When  my  stuff  commenced  to  arrive  I  was 
ashamed  of  it.  I  put  it  alongside  California  and  Colorado  stuff,  which 
came  in  there  all  separately  wrapped  and  in  a  nice  clean  crate  with  nice 
labels,  and  looked  very  attractive,  while  my  goods  were  not  wrapped  and 
my  crates  with  no  labels  looked  rough.  Right  here  1  found  that  the  pack- 
ing had  a  great  deal  to  do  with  the  selling  of  same.  The  goods  were  put 
on  the  market  side  by  side,  and  the  fruit  vender  would  come  in  and  look 
the  two  packages  over.  If  he  saw  a  single  cantaloupe  in  my  packing  that 
looked  the  least  bit  oft',  he  would  refuse  the  crate,  while  he  would  feel  one 
or  two  of  the  ones  wrapped  in  the  other  crate,  and  if  they  were  good  he 
would  pay  from  25  to  75  cents  per  crate  more  for  the  wrapped  goods. 
.  .  .  As  to  the  cantaloupes^  you  simply  can't  trust  them  to  allow  them 
to  crate  their  own  stuff  at  home,  for  there  is  always  someone  ready  to 
put   in  a   little  bad  stufl'." 

''Before  coming  to  Texas  I  was  in  the  wholesale  produce  business  for 
seventeen  years  in  Iowa,  and  I  wish  to  state  in  the  beginning  that  the 
commission  man  is  blamed  for  a  great  many  things  for  which  he  is  not 
responsible.  As  an  example  of  what  has  to  be  contended  with,  it  is  only 
in  the  case  of  a  big  surplus  and  a  consequent  overstock  of  the  markets 
that  he  is  able  to  get  goods  consigned  to  him.  In  times  of  scarcity  and 
high  prices  he  has  to  go  on  the  market  and-  pay  the  price  for  the  goods. 
It  is  also  not  unusual  for  him  to  get  the  goods  after  they  have  been  lying 
around  in  the  railroad  yards  for  several  days,  after  having  been  rejected 
by  some  party  to  whom  they  were  sold.  In  this  case,  he  has  to  go  on  the 
market  with  the  goods  and  get  the  best  price  he  can,  which  is  usually 
under  the  regular  market,  and  this  fact  has  a  tendency  to  lower  the  price 
of  the  first-class  product  which  has  to  come  into  competition  with  it.  This 
grade  of  stock  usually  has  to  be  handled  quickly  on  account  of  spoilage, 
and  when  the  shipper  gets  his  returns  there  is  no  question  what  he  would 
reasonably  expect  from  the  condition  of  the  goods  when  shipped  and  thinks 
he  has  been  robbed  by  the  commission  man,  and  there  is  no  doubt  but  that 
the  shipper  is  taken  advantage  of  in  a  good  many  cases  of  this  kind. 
Another  thing  that  must  be  remembered,  and  that  is  the  manner  of  pack- 
ing goods  in  an  honest  manner.  It  is  next  to  impossible  to  get  a  car  of 
goods  that  are  packed  honestly  all  the  way  through,  and  there  is  another 
place  where  the  commission  man  loses  a  lot  of  his  profits,  as  he  cannot 
inspect  but  a  small  per  cent  of  the  car  he  receives,  and  while  all  shippers 


00  Bulletin  of  the  University  of  Texas 

are  not  dishonest,  the  dishonest  ones  must  be  made  to  pack  tlieir  guods 
right  for  the  good  of  all." 

One  of  the  most  frequent  complaints  against  the  middleman 
and  the  policy  of  consigning  is  summed  np  by  these  experiences: 

"In  a  few  instances  when  the  market  was  overrun  we  have  shipped  to 
commission  merchants  generally  with  unsatisfactory  results.  Sometimes 
getting  such  reports  as  this:  That  our  produce  being  too  long  in  transit 
was  received  in  very  bad  condition,  and  had  to  be  sold  for  about  what  the 
freight  charges  came  to." 

"I  had  the  handling  of  several  carloads  of  peaches  in  charge  during  the 
season  of  1912.  The  peaches  were  fine  and  well  graded,  and  w«  made  a 
contract  to  let  a  company  have  them  for  50  cents.  There  was  a  large 
crop  of  peaches  that  year,  with  the  result  that  prices  went  down,  and  we 
received  a  message  from  the  party  with  whom  we  contracted  stating  that 
the  peaches  were  not  up  to  specifications.  We  were  completely  at  their 
mercy,  the  peaches  were  perishable,  and  we  had  to  sell  them,  so  we  let 
them  go  to  a  Chicago  firm,  some  bringing  9  cents,  others  bringing  nothing. 

1  became  so  disgusted  that  I  traded  my  orchard  off  and  came  to  this  place 
to  try  trucking.  I  find  there  is  some  difficulty  here  along  the  same  line, 
so  I  guess  there  is  no  use  in  running.  If  we  could  get  reasonable  rates 
and  men  could  be  placed  along  at  the  large  stations  to  look  after  ship- 
ments as  they  pass  through,  we  might  be  able  to  get  our  produce  to  the 
consumer  and  realize  some  profit  from  it;  that  is,  if  we  could  have  rep- 
resentatives at  the  point  of  destination  to  see  that  the  stuff  was  properly 
graded  also." 

"Have  had  but  little  experience  in  shipping  from  this  section,  but  will 
state  what  I  did  once  in  shipping  from  my  old  home  in  Louisiana.  1 
shipped  five  crates  each  of  Elberta  peaches  to  four  different  dealers  in 
St.  Louis,  Mo.,  and  the  peaches  were  picked  the  same  day,  packed  by  the 
same  packer,  shipped  the  same  day  by  express,  arrived  the  same  day  in 
St.  Louis,  were  sold  the  same  day,  and  the  result  was:  I  got  net  from 
the  four  firms  I  shipped  to,  and  all  charging  the  same  commission:  .$1.47 
net,  $2.42  net,  $4.87  net,  and  $5.00  net  each  for  the  five  crates.  .  .  . 
Can  you  give  a  reason  why?     I  can't,  unless  it  was  robbery." 

Most  truck  and  fruit  dealers  and  growers  know  that  experi- 
ences similar  to  the  above  are  rapidly  disappearing  where  growers 
aie  organized  and  have  their  personal  representatives  at  destina- 
tions. 

One  of  the  most  pressing  problems  in  marketing  is  the  great 
difference  between  what  the  producer  gets  and. what  the  consumer 
pays.     Upon  this  diflPercnce  hinges  the  whole  question  of  limited 


Cooperation  in  Agriculture^  Marketing,  and  Rural  Credit     61 

production  because  of  a  low  price  and  limited  consumption  be- 
cause of  a  high  price.  Abundant  evidence  can  be  had  of  this  en- 
hancement of  price.     The  following  are  examples: 

"I  own  and  operate  a  large  irrigated  farm  and  have  been  raising  Ber- 
muda onions,  lettuce,  beets,  and  other  truck  which  we  can  raise  in  large 
quantities.  However,  on  account  of  such  poor  prices  obtained  for  our 
products  we  are  now  being  forced  to  resort  to  other  means  for  a  livelihood. 
.  .  .  Season  of  1913  I  could  not  realize  even  2  cents  per  head  for  fine 
head  lettuce,  when  at  the  same  time  such  lettuce  was  being  retailed  in 
Dallas  and  other  cities  for  15  and  12^  cents  per  head  to  consumers.  It  is 
quite  obvious  to  me  that  we  have  to  contend  with  entirely  too  many  com- 
mission men  throughout  the  entire  United  States." 

"The  trouble  with  the  truck  is  the  distribution,  as  also  with  fruit. 
I  will  give  one  example:  In  1912,  I  was  in  a  vineyard  and  the  grapes 
were  going  to  waste,  and  seventy-five  miles  from  there  the  same  quality 
sold  at  12i  and  15  cents  per  pound.  You  ask  why  they  were  not  shipped. 
Both  places  were  on  the  railroad  and  the  same  system,  but  when  a  package 
was  started  there  was  no  assurance  it  would  get  there." 

"Relating  to  some  experience  in  1912,  I  dumped  several  carloads  of 
cucumbers,  besides  what  was  never  picked  from  the  field.  The  commission 
house  oould  not  sell  them,  cause  given,  market  overstocked.  By  investi- 
gation at  Chicago,  I  found  that  the  retail  price  was  not  below  5  cents 
a  piece,  and  thousands  of  people  never  will  enjoy  a  cucumber  at  that  price, 
and  I  know  that  to  a  consumer  that  is  a  prohibitive  price  and  blocks  the 
demand  for  them,  which  soon  results  in  an  overstocked  market.  Cucum- 
bers at  that  price  are  at  about  the  rate  of  $3.00  per  Texas  standard  crate, 
and  we  were  diimping  them  for  want  of  demand  (reported  at  any  price), 
while  50  cents  per  crate  delivered  at  Texas  common  points  is  a  good  price 
for  the  cukes,  which  is  less  than  1  cent  a  piece.  Allow  another  cent  for 
freight  and  other  expenses,  there  is  no  reason  that  the  consumer  should 
be  taxed  3  cents  more  for  a  little  cucumber." 

"In  1910  we  formed  a  watermelon  association,  elected  a  business  man- 
ager, and  paid  $80  for  a  'Blue  Book'  to  give  us  all  the  inside  information 
in  regard  to  produce  dealers  and  commission  firms.  And  shipped  fourteen 
cars  of  watermelons  to  different  parts  of  the  North.  They  all  praised  us 
in  regard  to  the  loading  of  the  cars  and  also  the  quality  of  the  melons. 
One  car  sold  in  Kansas  City  for  $10;  not  enough  to  pay  freight  and  other 
expenses.  One  of  our  townsmen  was  in  Kansas  City  the  same  day,  and 
the  class  of  melons  we  shipped  was  retailing  for  60  cents  a  piece.  That 
year's  business  left  us  to  pay,  at  the  least  calculation,  $200,  but  the  figures 
I  haven't  at  hand.  The  trouble  in  this  case  seemed  almost  wholly  with 
commission  men.  Our  country  is  new  and  we  haven't  had  much  experience 
yet>  but  all  that  we  have  shipped  out  we  have  shipped  at  a  loss.     I  am 


€2  Bulletin  of  the  University  of  Texas 

sending  you  a  letter  which  will  explain  itself  in  regard  to  another  load 
of  watermelons." 

"I  sold  some  t-omatoes,  thirty  crates,  by  express.  I  received  $8.40,  and 
some  I  did  not  get  anything  for.  I  had  in  one  car  590  pounds  of  cabbage^ 
I  did  not  get  but  $5.80  from  thirty  bushels  of  potatoes,  yet  we  will  plant 
four  acres  to  tomatoes  again,  hoping  prices  will  be  better." 

"I  sold  ten  tons  of  watermelons  to  local  dealers;  eight  cars  of  sweet 
potatoes  to  local  dealers,  sacked  and  put  in  car:  Two  cars  at  70  cents 
per  bushel;  one  car  at  60  cents  per  bushel;  four  cars  at  55  cents  per 
bushel;  one  car  at  50  cents  per  bushel.  Our  potatoes  went  to  Greenville,. 
Farmersville,  McKinney,  and  Bardwell,  and  sold  for  $1.50  per  bushel." 

"For  instance,  I  sell  a  barrel  of  spinach  or  lettuce  here.  I  get  here  at 
cash  deal,  $1.50,  or  somewhere  in  the  neighborhood  of  it;  when  that  reaches 
St.  Louis  it  sells  for  about  $5.00;  commission  on  that  is  from  50  to  75 
cents;  express,  $2.50;  icing  and  barrel,  50  cents,  which  in  all  is  $4.50  or 
$5.00.  Consumer  at  that  end  of  line  pays  at  the  rate  of  5  cents  per 
pound,  and  sometimes  10  cents,  which  will  retail  at  $8.00  and  more  a 
barrel  (there  is  always  from  150  to  200  pounds  to  a  barrel).  1  have  seen 
lettuce  sell  at  15  cents  a  head  that  won't  make  a  pound  to  a  head.  The 
farmer  who  raised  it  only  got  about  1  cent  a  head,  and  lots  of  times 
^  cent;  a  man  in  a  city  who  eats  such  vegetables  must  pay  for  some  barrels 
at  the  rate  of  $10  to  $15  a  barrel,  which  makes  too  much  profit  for  the 
middlemen  who  work  at  the  business.  When  we  ship  through  an  asso- 
ciation we  get  $1.50  to  $2.25  per  barrel,  and  it  sells  at  the  same  price  as 
before,  and  the  consumer  gets  it  at  a  little  less  because  they  go  direct  to 
market  men.  What  we  need  is  a  standard  marketing  plan  through  the 
government,  the  same  as  the  postoffice." 

"Two  years  ago  our  potatoes  were  bringing  35  to  50  cents  here  in  May, 
and  were  sold  in  retail  stores  in  Joliet  and  Blue  Island  at  $3.00  \^y  bushel. 
As  freight  is  about  30  cents  per  bushel,  the  farmer  of  Caney  evidently  did 
not  get  a  fair  price.  .  .  .  Our  potatoes  are  sacked,  the  average  sack 
weighing  115  pounds,  with  an  average  of  220  sacks  to  the  car.  I  shipped 
this  year  eight  cars  through  the  association.  Their  charge  is  7  cents  per 
hundredweight,  or  an  average  of  $18.18  per  car,  plus  $10  brokerage,  bring- 
ing commissions  to  $28.18  per  car.  My  point  here  is  the  unreasonable 
payment  of  two  commissions  by  the  farmer,  though  I  averaged  42  cents 
per  bushel.  My  net  profit  on  thirty  acres  was  $23.31.  I  know  of  several 
men  who  either  had  to  pay  freight  charges  or  received  two  or  three  dollars 
net  for  a  car  of  spuds.  These  potatoes  were  shipped  in  June  and  July, 
through  commission  men.  I  believe  a  fair  price  to  growers  of  early 
potatoes  for  Northern  markets  should  be  $1.00  per  bushel  F.  0.  B.,  at 
least,  judging  from  five  years'  experience." 

During  the  coming  year  we  sliall  make  a  study  of  the  causes  of 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     63 

failure  and  success  of  cooperation  in  Texas.  Many  truckers'  asso- 
ciations have  either  failed  or  are  inactive.  Dozens  of  others  in 
different  parts  of  the  state  are  making  money  for  their  members. 
The  success  of  these  warrant  us  in  advocating  cooperative  buying 
and  selling.  The  following  cases  are  cited  merely  to  show  what 
may  cause  the  failure  of  local  associations,  what  type  of  problems 
may  be  solved  and  how  success  may  be  attained.  For  the  prin- 
ciples of  cooperation,  the  reader  is  referred  again  to  Chapter  T. 

"We  had  a  very  good  association  here  in  1912,  and  I  acted  as  sales 
manager.  Most  of  our  vegetables  were  sold  through  commission  men,  and 
although  I  still  believe  most  of  those  people  are  honest,  I  must  say  I  was 
sometimes  very  much  disappointed  with  the  returns  received.  We  handled 
twelve  cars  of  cucumbers,  ten  cars  of  Irish  potatoes,  about  twenty  cars 
of  yellow  yams,  besides  various  other  small  truck,  all  of  which  was  sold 
to  commission  men.  All  of  our  stuff  was  put  out  as  attractive  as  it  was 
possible  to  make  it,  and  we  made  it  a  point  to  send  out  excellent  grades." 

"There  were  sixty-four  solid  car  lots  of  tomatoes  shipped  from  here 
this  season,  1913,  and  fully  one-half  as  much  express,  bought  and  shipped 
by  merchants,  including  all  kinds  of  vegetables.  There  were  some  that 
had  extra  early  and  heavy  yields  per  acre  that  did  very  well.  We  are 
not  satisfied  with  the  present  prices,  owing  to  the  heavy  expense  of  pro- 
ducing. The  price  for  the  first  few  crates  is  very  satisfactory,  but  before 
we  can  get  anything  near  half  of  our  crop  off,  the  price  runs  down  so  low 
that,  as  a  general  rule,  there  is  very  little  money  in  picking.  The  people 
are  doing  much  better  since  they  have  organized  and  hire  their  own  sales- 
man. Crates  cost  from  3  to  4  cents  less  than  before.  Fertilizer,  $8.00 
to  $10  less  per  ton;  seed  and  everything  else  in  proportion.  We  pay  our 
salesman  3  cents  per  crate  for  selling  in  car  lots,  he  furnishing  all  hia 
own  help." 

The  difference  between  what  the  producer  gets  and  what  the 
consumer  pays  can  only  be  cut  down  by  eliminating  the  people 
who  get  that  difference.  This  can  be  done  only  by  the  process 
of  cooperation  on  the  part  of  producers  and  consumers.  It  is  not 
sufficient  that  growers  organize  and  then  sell  as  an  association  to 
the  same  middleman  to  whom  tlie  individual  producer  might  have 
sold.  This  merely  means  a  small  increase  in  price  for  the  pro- 
ducer, but  the  middleman  will  still  control  the  situation  entirely 
by  maintaining  the  present  high  price  to  the  consumer  and 
thereby  keeping  the  demand  down  to  a  minimum.  Cooperation 
must  do  for  perishable  products  on  a  larger  scale  what  the  parcels 
post  has  done  for  butter  and  eggs  or  could  do  for  fruit  and  vege- 


64  Bulletin  of  the  University  of  Texas 

tables  in  small  amounts.     Cooperation  will  succeed  only  when  it 
proves  itself  more  efficient  than  the  middleman. 

Under  present  conditions  there  is  a  large  and  undeveloped  mar- 
ket for  perishable  produce  within  the  borders  of  our  own  state. 
Again  there  is  the  possibility  of  the  home  canner  and  the  saving 
of  surplus  stock.  The  following  are  given  as  examples  of  what 
may  be  done  in  this  way: 

"I  market  plums,  peaches,  black  and  dewberries,  tomatoes,  melons,  and 
a  number  of  good  hogs.  My  stuff  is  always  well  prepared  for  market  and 
generally  commands  top  prices.  I  always  sell  and  buy  as  an  individual. 
I  have  sold  quite  a  lot  of  fruit  and  truck  through  a  commission  merchant 
in  San  Antonio  very  satisfactorily.  I've  never  shipped  anything  when  I 
could  find  a  good  market  at  home  for  my  stuff.  Prices  with  me  are  gen- 
erally satisfactory." 

"My  best  results  were  selliijg  to  grocerj^  merchants  in  places  some  dis- 
tance from  wholesale  houses.  I  wrote  to  express  agents  at  these  places 
and  got  names  of  retail  grocery  merchants,"  and  quoted  them  and  sold 
direct.  I  was  enabled  to  sell  cabbage,  for  instance,  at  1 J  to  2  cents  per 
pound,  with  no  loss,  as  they  accepted  my  weights;  whereas,  my  neighbor 
shipped  in  carloads  to  wholesale  houses  and  got  from  i  to  f  cent  per 
pound,  after  loss  was  taken  out.     He  loaded  in  bulk." 

"We  raise  vegetables  and  strawberries  in  quantities  large  enough  for 
shipment.  We  packed  in  one-third  bushel  boxes  and  crates,  or  bushel 
boxes.  Some  commission  men  dealt  fair  with  us;  others  took  every  advan- 
tage possible.  I  often  shipped  from  forty  to  fifty  crates  of  tomatoes  daily 
at  good  prices,  from  75  cents  to  $1.00  for  one-third  of  a  bushel.  In  Feb- 
ruary and  March  our  strawberries  brought  $7.00  a  crate.  For  some  years 
we  have  shipped  very  little  in  our  own  name.  We  sell  to  a  merchant  in 
Rockport.  When  we  have  a  fair  idea  how  much  we  will  have  for  the  day 
we  call  him  up  and  ask  him  what  he  is  paying  then,  and  when  he  wishes 
the  stuff  shipped.  We  find  this  far  more  satisfactory;  then  we  run  no 
risk  and  know  just  what  we  will  get  before  we  let  it  go  out  of  the  packing 
house.     .     .     ." 

"A  certain  farmer  had  four  acres  of  tomatoes.  From  these  four  acres 
he  canned  several  thousand  cans.  Of  the  four  products — figs,  tomatoes, 
beans,  and  peas — he  canned  with  a  home  canning  outfit  about  thirty  thou- 
sand cans.  In  this  way  he  was  able  to  fix  his  own  price  for  his  product. 
These  canned  goods  were  carried  to  the  Beaumont  fair  for  exhibit  pur- 
poses. The  farmer  sold  all  of  these  products,  and  could  have  sold  more. 
The  goods  were  sold  to  two  retail  dealers  in  Beaumont  and  to  some 
private  parties  from  different  points.  It  was  stated  that  he  had  tried  to 
sell  in  bulk  to  a  wholesaler.  The  wholesaler  would  not  talk  about  the 
farmer's  price,  neither  would  the  farmer  consider  the  price  offei-ed  by  the 


Cooperation  in  Agriculture^  MarJceting^  and  Rural  Credit     65 

wholesaler,  as  it  was  about  55  cents  less  per  case  of  two  dozen  two-pound 
cans;  but  when  he  got  in  touch  with  a  retailer  he  sold  at  the  price  which 
he  asked  of  the  wholesaler." 

"Last  year  I  sold  canned  fruits  and  vegetables  to  the  amount  of  $50. 
I  advertised  in  a  Dallas  daily,  and  most  of  my  customers  were  from  that 
city.  I  received  many  orders  without  remittance  for  same.  To  these 
people  I  would  send  personal  reference  and  state  I  could  not  ship  goods 
without  check  for  same.  But  I  never  received  an  order  from  anyone  I 
refused  to  send  goods  to.  However,  many  would  send  cash  with  order. 
1  still  have  these  customers  this  year.  I  find  I  receive  very  little  money 
for  my  produce,  as  it  costs  so  much  to  deliver.  Express  on  small  packages 
eats  up  the  profit.  But  I  find  it  equally  as  cheap  as  to  deliver  by  parcels 
post.  ...  I  have  200  bushels  of  sweet  potatoes.  They  are  rotting 
fast,  but  cannot  find  a  market  for  them.  My  highest  offer  is  40  cents 
per  bushel,  sacked  F.  O.  B.  at  Mt.  Pleasant.  Sacks  cost  9  cents  each, 
and  to  haul  eight  miles  over  rough  roads,  you  see  would  leave  me  scarcely 
anything  for  my  potatoes.  For  this  reason  I  am  feeding  them  to  my  hogs. 
I  have  written  several  letters  to  Dallas  houses,  offering  my  potatoes  at 
80  cents  per  bushel.  They  say  that  the  transportation  will  make  the 
potatoes  too  costly." 

Cotto7i 

As  stated  on  a  previous  page,  tliree  out  of  every  five  farmers 
furnish  information  on  the  marketing  of  cotton  before  they  pass 
to  another  subject.  By  far  the  greater  majority  are  much  dis- 
satisfied with  present  conditions.  But  there  are  those  who  from 
one  reason  or  another  have  found  the  market  either  satisfactory 
or  fairly  so.     We  gives  a  few  examples : 

"I  raised  and  marketed  at  the  local  market  twenty  bales  of  cotton  at 
an  average  of  13  cents  per  pound.  I  marketed  my  cotton  very  early. 
Later  in  the  season  the  price  was  much  lower." 

"I  have  marketed  this  year  forty  bales  of  cotton,  which  I  received  a 
good  price  for,  I  store  away  in  a  warehouse,  watch  the  market  reports 
and  turn  loose  when  a  fair  price  prevails." 

"We  produced  through  labor  on  our  farm  over  fifteen  bales  of  cotton. 
and  in  regard  to  prices  we  were  very  well  satisfied,  considering  the  season. 
We  got  a  five  months'  drouth  and  cotton  did  not  open  till  late,  and  pick- 
ing hard,  and  that  run  prices  -ilown,  and  we  got  late  rain  that  caused 
mildew.  Prices  were  better  here  this  year  than  heretofore.  The  first 
prices  here  on  cotton  were  from  12^  to  14J  cents." 

"HaVe  been  selling  my  cotton  locally,  but  shipped  last  bale  to 

&  Co.,  Galveston.  A  neighbor  has  been  making  $3.00  to  $4.00  net  profit 
per  bale  by  shipping  his  cotton  to  Galveston." 


^  66  Bulletin  of  the  University  of  Texas 

"The  price  was  satisfactory  for  us.  As  we  plant  early,  our  products 
always  are  the  first  on  the  market;  our  cotton  yielded  an  average  price 
at  12i  cents  per  pound.  We  need  but  1400  pounds  of  seed  cotton  to  make 
a  bale  of  550  pounds.  The  bale  will  bring  $68.75;  the  seed  of  one  bale 
averages  to  about  $7.75,  so  the  bale  with  seed  and  wool  together  yields 
$76.50;  the  expense  for  picking  is  about  $11,  so  it  leaves  us  $68.50  per 
bale." 

"I  market  cotton  and  cotton  seed  from  100  to  200  bales  and  from  50 
to  100  tons  of  seed  properly  prepared  for  market.  I  grow  it  on  my  farm, 
sell  at  home  when  prices  are  satisfactory,  consign  when  prices  are  below 
10  cents  per  pound.  When  I  consign  I  ship  to  the  commission  merchant, 
who  sells  when  told  to  do  so.  I  get  market  price,  don't  expect  anything 
more;  always  know  what  the  price  is  when  I  order  sold,  hence  have  no 
complaint  to  make.  Transportation  is  satisfactory.  Sometimes  delays 
arise,  but  never  unreasonable.  I  look  after  my  shipments  and  require  my 
commission  merchant  to  look  after  them.  I  don't  expect  too  much,  hence 
have  no  complaint  to  make  and  am  satisfied." 

As  is  too  well  known  the  difficulties  of  the  marketing  situation 
are  numerous  and  the  causes  of  dissatisfaction  various.  The  cot- 
ton market  is  the  study  of  a  life  time.  It  is  hoped  that  our  brief 
discussion  and  the  material  from  which  we  draw  it,  will  not  only 
be  of  service  to  the  growers  but  also  to  all  those  who  are  working 
on  the  problems  connected  with  the  South's  greatest  crop. 

One  cause  of  dissatisfaction  is  the  variation  between  local  and 
central  prices:  for  example,  eleven  and  one-half  cents  in  the  small 
town  and  two  cents  above  that  in  the  city.  This  difference  causes 
greatest  vexation  when  the  cotton  is  due  the  local  dealer  because 
of  book  accounts.  In  such  a  case  the  grower  sometinies  goes  so 
far  as  to  advocate  a  fixed  price. 

If  in  any  community  the  bankers,  merchants  and  other  creditors 
of  the  farmer  date  their  obligations  to  'be  due  at  the  height  of  the 
picking  season,  it  appears  self-evident  that  the  cotton  producers 
will  of  necessity  bear  the  market.  This  means  loss  to  all.  It 
would  mean  much  to  the  financial  status  of  the  community  if 
credit  could  be  arranged  to  accomplish  some  of  the  things  that 
the  advocates  of  the  warehouse  system  desire. 

Again  it  is  reasoned  by  some  that  when  the  season  first  opens 
cotton  is  high,  but  after  a  few  weeks  the  price  drops  and  there- 
fore the  farmer  loses  ten  or  twelve  dollars  on  each  bale.  It  "Crould 
be  just  as  logical  for  the  melon  grower  to  say  that  because  he 
can't  grow  watermelons  for  Christmas  dinner  tables  he  loses  sev- 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     67 

enty-five  cents  on  each  melon  that  he  does  grow  several  months 
afterward. 

One  grower  reports  a  sale  of  eleven  bales  at  thirteen  and  three- 
fourths  cents  as  unsatisfactory  and  believes  he  ought  to  have  had 
fifteen  cents.  In  many  cases  the  grower  reasons  from  the  basis 
of  ''justness"  or  "reasonable  price."  Price  is  not  determined  on 
this  basis. 

Prices  in  certain  cases  are  regarded  as  unsatisfactory  because 
of  a  fluctuating  market  and  the  growers'  inability  to  keep  posted 
on  the  same.  Several  farmers  report  unusually  low  yields  and 
then  argue  as  if  their  crop  should  be  sold  for  enough  to  place 
them  on  an  equal  footing  with  their  neighbors  who  have  larger 
productions  per  acre.  As  is  apparent,  this  has  the  fault  of  leav- 
ing cost  of  production  entirely  out  of  account. 

There  are  farmers  who  remember  the  day  when  wheat  was  fifty 
cents  a  bushel;  oats,  fifteen  to  thirty  cents,  and  for  cotton  six 
cents.  To  them  the  prices  of  the  last  few  years  are  attractive  but 
the  rise  in  the  prices  of  the  materials  used  in  production  must 
also  be  kept  in  mind.  In  numerous  instances  twelve  or  twelve 
and  one-half  cents  is  regarded  as  a  remunerative  price,  and  it 
may  be.  That  depends  upon  cost  of  production.  The  situation 
seems  to  be  that  those  who  are  dissatisfied  with  such  a  price  have 
no  definite  idea  of  cost  of  production,  and  therefore  no  account  of 
profits.  While  hundreds  of  farmers  say,  "the  farmer  has  nothing 
to  d«  with  fixing  the  price,"  not  one  says,  "the  farmer  has  every- 
thing to  do  with  fixing  the  cost  of  production." 

Little  need  be  said  concerning  grading,  because  it  has  been  so 
widely  discussed.  But  it  is  interesting  to  note  some  difference  in 
prices  due  to  grading.  In  one  case  it  was  ten  dollars  a  bale.  In 
another,  there  was  a  difference  of  $35.00  between  highest- and  low- 
est. In  one  instance,  at  least,  the  work  of  a  demonstraton  agent 
to  establish  at  the  county  seat,  government  cotton  grades  was  de- 
feated by  the  action  of  the  street  buyers. 

The  importance  of  grading  could  hardly  be  estimated  in  dollars 
and  cents. 

"The  farmer  is  unorganized  and  buyers  as  a  rule  cannot  depend  on  him 
for  any  amount  of  really  clean  marketable  stuff;  second,  the  buyers  that 
we  have  generally  do  not  grade  the  stuff  they  buy,  but  buy  it  by  the 
dozen  pounds,  etc.,  which  does  not  offer  the  producer  much  encouragement 


68  Bulletin  of  the  University  of  Texas 

to  raise  a  better  grade,  and  the  buyer  comes  out  even  by  making  off  of 
one  what  he  lost  on  another,  etc.  Last  year  one  of  my  demonstrators 
raised  a  bale  of  fine  staple  cotton  and  when  he  had  it  ginned  he  carried 
the  sample  to  the  different  buyers  in  the  town  for  prices.  They  all  made 
a  bid,  setting  the  price  at  what  middling  fair  was  selling  at,  which  was, 
if  I  remember  right,  12^  cents  per  pound.  It  happened  that  the  last  man 
he  carried  his  cotton  to  consulted  a  Liverpool  man,  who  was  at  that  time 
here  looking  after  the  cotton  interest  of  this  place;  after  some  few  min- 
utes of  consultation  between  the  two,  which  was  strictly  private,  this 
buyer  gave  15  cents  per  pound  for  it  under  the  advice  of  the  Liverpool 
man.  I  do  not  know  what  this  cotton  brought  on  the  foreign  markets, 
yet  I  think  it  is  safe  to  say  that  it  brought  at  least  20  cents  per  pound. 
This  is  only  one  instance  where  the  farmer's  products  were  underestimated. 
The  same  day  of  this  transaction  another  farmer  brought  a  bale  of  'King's 
Improved'  short  staple  cotton  to  the  gin,  and  sold  it  at  the  price  first 
offered  (12 J  cents),  the  one  with  the  long  staple.  These  conditions  have 
existed  for  a  long  time,  and  will  continue  to  do  so  until  the  farmers  are 
organized,  and  sell  direct  to  the  manufacturers  and  consumers." 

In  selling  to  a  street  buyer,  there  is  sometimes  a  variation  of 
one-half  to  one  and  one-half  cents  on  the  same  grade,  on  the  same 
day,  in  the  same  county.     Here  is  another  example : 

"I  offered  two  bales  of  cotton  for  sale  here  this  fall  and  was  offered 
$10.25  for  it.  I  refused  to  take  it,  and  hauled  it  fourteen  miles  to 
another  town  and  received  $12.80  for  the  same  cotton  the  same  day." 

"What  I  have,  I  have  been  in  the  habit  of  selling  to  local  buyers  at 
whatever  price  I  could  get.  I  find  this  so  very  unsatisfactory  that  I  have 
most  abandoned  raising  it.  I  have  seldom  gotten  more  than  it  cost  to 
raise.  I  was  raised  on  the  farm  under  the  old  system  of  producing  all 
you  could  of  one  or  two  commodities,  and  selling  for  what  you  could  get. 
When  I  came  to  take  up  the  work  upon  my  own  responsibility,  I  changed 
tactics.  After'  studying  conditions  I  selected  the  products  that  I  could 
more  or  less  control  the  prices  of,  and  I  find  farming  very  pleasant  and 
reasonably  profitable." 

Instances  are  given  of  where  one  small  town  has  as  many  as 
three  buyers  but  they  take  turn  about  in  their  bidding.  Advo- 
cates of  the  warehouse  system  call  attention  to  the  fact  that  under 
a  proper  system  of  holding,  street  buying  and  selling  would  be 
eliminated.  It  would  also  be  eliminated  by  a  system  of  coopera- 
tive marketing. 

The  present  system  of  handling  cotton  and  the  wastes  incurred 
have  received  much  attention,  but  little  is  being  done  to  prevent 
great  losses.     Along  this  line  we  offer  a  few  interesting  examples : 


Cooperation  in  AgncuUure,  Marketing,  and  Rural  Credit     69 

"In  the  year  1911  I  visited  the  Southeast  African  Colonial  Exposition  in 
Cassel,  Germany.  This  expression  was  held  to  show  the  German  people 
what  could  be  done  in  their  southeastern  possessions  in  Africa.  There  was 
a  bale  of  cotton  from  Southeast  Africa,  from  Egypt,  from  India,  from  Peru, 
and  one  from  the  United  States.  That  was  one  time  when  I  was  ashamed 
to  be  an  American.  All  the  bales  were  neatly  wrapped.  No  holes  in 
them,  no  cotton  exposed,  and  plenty  of  ties  around  them.  The  American 
bale  looked  like  a  tramp,  full  of  holes,  which  had  been  patched  up  with 
a  variety  of  materials,  and  cotton  sticking  out  everywhere.  I  thought  that 
this  tramp-like  looking  bale  had  been  selected  purposely,  but  later  I  saw 
thousands  like  it  in  Bremen  and  in  Liverpool." 

"Cotton,  I  think,  should  be  put  up  in  better  wrapping,  sampled  and 
weighed  at  the  gins  under  bond,  and  not  allowed  cut  away.  I  am  weigher 
and  classer  here,  and  out  of  3200  bales  I  have  got  eight  bales  500  pounds 
each  loose  cotton  and  only  took  the  samples  that  would  have  wasted. 
A  burning  shame.  Every  cotton  market  should  have  a  weigher  and  sampler 
at  the  gin.  And  again,  we  should  have  government  or  standard  types  or 
class  on  hand  all  the  time  during  cotton  season  for  comparison.  I  have 
a  full  set  of  government  types,  but  some  buyers  say  they  are  too  full, 
others  say  they  are  too  shy,  all  of  which  goes  to  prove  that  out  of  our 
present  wasteful  system  and  haphazard  Avay  of  classing  we  should  cer- 
tainly evolve  some  way  that  would  make  a  middling  bale  of  cotton  be  a 
middling  bale  anywhere." 

Because  of  limited  space  we  have  omitted  from  these  pages 
most  of  the  plans,  schemes  and  ideas  which  have  been  proposed  to 
us  as  sure  cures  for  various  ailments.  But  there  is  a  preponder- 
ance of  opinion  when  it  comes  to  doctoring  the  cotton  market. 
The  following  opinion  speaks  for  dozens: 

"It  would  help  some  if  the  government  would  require  every  gin  man  to 
be  qualified  to  grade  cotton,  and  he  should  be  put  under  bond,  an^  from 
every  bale  of  cotton  that  he  gins  he  should  retain  a  sample,  and  number 
it,  and  also  number  the  bale  to  correspond;  hence,  we  could  sell  by  the 
sample  and  never  have  to  cut  the  bale.     There  must  be  something  done." 

Again  there  are  some  who  desire  a  Bureau  of  Information  es- 
tablished by  the  government  for  the  purpose  of  giving  out  sta- 
tistics of  consumption  every  sixty  days.  Some  avocate  a  govern- 
ment purchasing  agent  in  every  town.  Others  go  no  .further  than 
to  advocate  open  telegraphic  reports  from  the  exchanges  and  a 
public  exhibition  of  standard  grades. 

It  is  quite  generally  believed  that  if  the  ginner  were  put  under 
bond,  his  weight  and  grade  would  be  accepted  by  all  who  handled 


70  Bulletin  of  the  University  of  Texas 

the  bale.  This  would  do  away  with  future  cutting,  sampling  and 
robbing.     Insurance  rates  would  be  lower  as  risk  would  be  less. 

One  party  makes  the  interesting  suggestion  that  those  who  are 
able  should  follow  the  policy  of  former  days  by  storing  the  crop 
in  the  seed  and  ginning  as  the  spinners  need  it.  This  plan  has 
the  advantage  of  improving  the  lint,  of  making  a  more  constant 
use  of  gins  and  labor,  and  having  fewer  gins.  It  would  tend  to 
remove  the  conditions  of  a  glutted  market  and  so  equalize  prices 
as  to  prevent  the  mistake  of  planting  a  great  acreage  on  the 
strength  of  high  spring  prices. 

For  other  examples  of  success  in  handling  cotton  or  other  prod- 
ucts mentioned  in  this  chapter,  through  cooperative  action  and 
methods,  the  reader  is  again  referred  to  that  part  of  Chapter  I 
which  discusses  "Tvpes  of  Farmers'  Organizations." 


CHAPTER  HI 

RURAL  CREDIT 

INTRODUCTION 

During  the  past  few  years,  the  subject  of  financing  the  farmer 
has  been  more  widely  discussed,  perhaps,  than  any  other  subject 
connected  with  rural  life.  It  is  not  our  intention  to  go  into  a 
discussion  of  the  entire  subject  in  this  chapter.  We  expect  rather 
to  interest  the  farmers  in  the  material  which  is  now  in  print  on 
this  subject.  In  the  back  of  this  bulletin  will  be  found  a  list  of 
books  and  papers  which  may  be  obtained  without  difficulty.  In 
their  pages  will  be  found  information  concerning  every  phase  of 
rural  credit  and  finance.  The  Division  of  Public  Welfare  will 
not  only  be  glad  to  aid  in  securing  these  books  and  papers  for  all 
who  apply  for  them,  but  will  give  personal  assistance  and  aid  in 
any  case  where  a  credit  union  is  either  contemplated,  or  is  in 
process  of  formation. 

In  spite  of  the  fact  that  this  subject  has  had  wide  discussion, 
there  is  yet  need  for  a  more  extended  campaign  of  education. 
Indeed,  it  is  along  the  line  of  education,  leadership,  and  personal 
service,  rather  than  along  the  line  of  legislation,  that  there  is  the 
greatest  need  at  the  present  time.  Mr.  Leonard  G.  Robinson,  a 
leader  of  the  Jewish  farmers  in  America,  has  stated  the  situation 
very  well:  "What  is  needed  is  not  a  commission  of  study  but 
one  of  action.  We  have  learned  all  that  we  are  going  to  learn  of 
the  European  credit  systems  without  actually  putting  our  hands 
to  it.  To  my  mind,  in  order  to  establish  cooperative  credit  in 
the  United  States,  w^e  must  have  (1)  legislation  to  facilitate  the 
incorporation  of  such  associations;  (2)  education  to  bring  to  the 
American  farmer  a  true  appreciation  of  the  benefits  of  such  asso- 
ciations; and  (3)  organization,  that  is,  leadership  to  perform  the 
actual  task  of  organizing  and  starting  these  associations." 

The  Natiwe  of  Capital 

A  great  many  people  have  a  wrong  notion  about  capital.  With 
some  people  it  means  only  money,  and,  in  many  cases,  a  great 
deal  of  money.     This  is  not  the  right  idea.     Capital  is  stored-up 


72  Bulletin  of  the  University  of  Texas 

savings,  and  all  capital  is  a  result  of  saving.  In  order  that  capi- 
tal may  be  accumulated,  somebody  must  produce  more  than  they 
consumed.  It  is  evident  that  if  all  of  a  workman's  wages  are 
spent,  and  used  up  as  fast  as  made,  that  he  will  never  have  any 
saving.  But  as  soon  as  he  begins  to  save  something,  then  he 
comes  into  a  position  to  be  a  capitalist.  If  he  uses  his  savings 
to  produce  something  else,  he  is  then  a  capitalist.  Whether  he 
is  a  capitalist  or  not  does  not  depend  on  the  axQOunt  of  his  sav- 
ing. Of  course,  if  he  is  to  do  much  producing,  he  must  have  a 
considerable  amount  of  capital.  These  savings  may  take  any 
one  of  a  greater  number  of  forms.  They  do  not  need  to  be  in 
money  at  all.  Indeed,  money  is  a  respresentative  or  a  measure 
of  true  capital  goods. 

The  farmer  is  just  like  the  wage-earner  is  this  respect.  If  he 
expects  to  be  much  of  a  producer,  he  must  have  capital.  That 
capital  must  come  either  from  his  own  savings  or  the  savings  of 
some  one  else.  What  the  farmer  really  wants  is  not  money,  but 
implements,  tools,  live  stock,  and  other  things  which  help  to  pro- 
duce the  crop.  The  only  reason  why  he  ought  to  want  this  capi- 
tal is  because,  after  he  has  used  it  in  producing  his  crop,  he 
cannot  only  pay  for  the  use  of  his  capital,  his  land,  and"  his  labor, 
but  have  something  left  out  of  the  crop  that  he  has  produced. 
What  he  has  left  becomes  a  part  of  his  wealth,  and  if  he  uses  it 
for  further  production,  it  becomes  capital,  whether  it  be  large  or 
small  in  amount. 

Why  Should  Farmers  Borrow? 

Farmers  should  borrow  because  they  cannot  save  enough  out  of 
their  own  production  to  allow  them  to  keep  up  with  the  amount 
of  capital  which  they  should  use  in  their  business.  In  other 
words,  the  safe  and  sane  kind  of  borrowing  is  that  which  borrows 
for  a  productive  purpose  only.  Because,  at  the  end  of  a  certain 
time,  if  the  loan  has  been  used  in  the  right  way,  it  has  produced 
enough  to  allow  the  borrower  to  repay  the  loan  with  its  interest 
and  have  a  surplus  left.  Just  here  is  where  we  have  some  trouble. 
The  system  of  credit  that  so  many  thousands  of  farmers  us6  is  too 
well  knoT^Ti  to  need  any  explanation  here.  At  another  time,  we 
have  said  that  the  farmer  who  depends  on  one  crop  and  runs  a 
credit  account   with  the  guarantee  that  he   would   pay  his   debt 


Cooperation  in  Agriculture^  Marketing^  and  Rural  Credit     73 

when  that  crop  was  produced,  stood  in  a  financial  position  which 
might  be  represented  by  the  equation  that  the  merchant  plus  his 
goods  equals  the  farmer  plus  his  crop.  That  when  the  time  came 
to  "settle  up,"  it  was  usually  found  that  the  merchant  plus  his 
goods  minus  the  farmer  plus  his  crop  equals  nothing.  This  is 
not  the  fault  of  the  merchant,  although  he  may  contribute  to  some 
of  the  trouble  because  in  selling  goods  on  credit,  it  is  neces- 
sary to  sell  them  for  more  than  it  is  when  they  are  sold  for  cash. 
The  point  that  we  want  to  notice  here  is,  that  if  the  farmer  has 
nothing  left  at  the  end  of  each  year  for  ten  years,  he  is  not  any 
nearer  to  being  a  capitalist  at  the  end,  than  he  was  in  the  begin- 
ning. In  the  present  credit  system,  the  farmer  himself  contrib- 
utes some  trouble  because  he  buys  for. two  purposes;  first,  for  a 
productive  purpose,  and,  second,  for  consumption.  By  consump- 
tion, we  may  mean  a  number  of  things,  but  most  of  all,  perhaps, 
food  and  clothing;  unless,  of  course,  he  has  enough  credit  to  buy 
a  consumptive  good  like  an  automobile,  or  anything  else  that  he 
may  want  to  use  for  his  pleasure  rather  than  to  aid  him  in  pro- 
duction. In  a  general  way,  buying  or  borrowing  for  consumption 
only,  is  to  buy  or  to  borrow  something,  and  find  out  when  it  is 
used  up  and  gone  that  it  has  not  left  enough  to  repay  what  it  cost. 
In  many  cases,  the  fact  that  a  man  did  possess  credit  has  been 
a  detriment  rather  than  an  aid,  for  he  has  bought  without  asking 
the  question  as  to  whether  what  he  was  buying,  when  it  was  used 
up,  would  leave  him  in  better  condition  than  he  is  at  the  present 
time.  Unless  a  man  is  possessed  of  the  judgment  which  wi^i  en- 
able him  to  know  when  to  enter  into  an  obligation  or  i^^cii-  n 
debt,  for  a  productive  purpose  and  when  to  incur  a  d^c^'t  lor  n 
consumption  purpose,  the  credit  which  he  possesses  with  his  mer- 
chant or  banker,  becomes,  in  his  hands,  a  gun  that  he  is  sure  is 
not  loaded.  The  credit  system  that  the  country  is  now  using  is 
dangerous  even  in  the  hands  of  a  person  possessed  of  more  than  the 
ordinary  or  average  degree  of  foresight,  industry,  business  sense, 
and  management.  This  is  due  in  a  large  measure  to  the  extended 
time  for  which  book  accounts  run.  The  day  when  the  debt  must 
be  paid  is  so  far  in  the  future  that  it  completely  balances  or  over- 
balances the  fact  that  we  are  buying  something  which  is  not 
needed.     But  when  the  day  to  "settle  up"  comes,  the  cost  price 


74  Bulletin  of  the  University  of  Texas 

for  it  just  as  the  cost  price  for  the  most  useful  article  obtained 
must  come  out  of  the  crop. 

A  Low  Interest  Rate 

It  has  been  suggested  that  the  Federal  Government  loan  to 
farmers  "as  a  class''  at  a  low  rate.  If  the  farmer  is  "the  back- 
bone of  the  nation"  he  will  resent  the  idea  of  any  favor  because 
he  belongs  to  a  class.  This  is  not  a  question  to  be  settled  by 
paternalism.  The  low  interest  rates  paid  by  the  European  farmer, 
about  which  so  much  is  being  said  and  written,  did  not  begin  in 
this  way.  The  lowering  of  the  rate  began  not  with  the  government 
and  it  millions  plus  legislative  enactment.  It  began  with  the 
folks  and  cooperative  organization.  Cooperation  is  a  question  not 
of  the  law  but  of  the  spirit.  The  German  who  belongs  to  the 
Landschaften  as  a  mortgagor  does  not  need  to  ask  a  favor  from 
his  government  because  his  farmers'  organization  has  sold  its 
bonds  on  the  money  market  above  the  bonds  of  his  Imperial 
Government.  The  German  farmer  by  private  initiative  went  into 
the  horn  of  plenty  through  the  little  end.  It  had  but  one  other 
place  where  he  could  come  out. 

Interest  is  that  which  is  paid  for  the  use  of  capital.  We 
usually  think  of  it  in  terms  of  money,  and  as  a  certain  fraction 
of  the  principal,  but  there  is  no  need  for  us  to  do  this.  We  do 
not  think  of  share  rent  in  terms  of  money,  although  it  is  as  much 
rent  as  is  cash  rent.  The  rate  of  interest  is  supposed  to  be  regu- 
lated to  a  certain  extent  by  law.  In  Texas  it  is  unlawful  to 
charge  more  than  10  per  cent  interest  per  annum.  Every  one 
who  has  had  anything  to  do  with  borrowing  or  lending  knows  that 
this  law  is  constantly  violated.  One  of  the  most  frequent  ways 
in  which  the  law  is  violated  is  to  charge  ten  per  cent  interest  and 
have  the  loan  run  for  less  than  a- year's  time.  If  there  is  a  loan 
at  ten  per  cent,  and  it  runs  for  only  nine  months,  that  is  the  same 
as  thirteen  and  one-third  per  cent  for  a  year.  There  is  another 
law  which  has  more  to  do  with  regulating  the  interest  rate — it  is 
the  economic  law  of  supply  and  demand.  If  there  is  a  small 
amount  of  capital,  and  everybody  wants  it,  then  the  interest  rate 
will  be  high,  and  that  is  the  situation  in  Texas  at  the  present 
time.     Why   should    there   be   a   small   amount   of   capital?     Be- 


Cooperaiion  in  Agriculture^  Marketing,  and  Rural  Credit     75 

<;aiise  the  majority  of  producers  have  consumed  as  fast  as  they 
produced  and  there  has  been  no  savings.  Our  State  is  yet  young. 
If  there  are  no  savings  there  can  be  no  lenders,  but  there  will  be 
a  great  number  of  borrowers.  When  there  are  a  great  number 
of  borrowers,  it  will  follow  that  they  will  bid  for  capital,  and  of 
course  bid  up  the  price  which  is -the  interest  rate.  Reverse  the 
case,  and  have  each  farmer  with  a  surplus  of  savings,  and  you 
will  have  the  majority  of  people  in  a  position  to  lend,  and  the 
lenders  will  be  bidding  the  price  of  capital  down,  because  the 
minority  of. the  people  want  to  use  it.  This  is  the  situation  in  a 
number  of  the  older  countries.  They  have  more  lenders  than  bor- 
rowers, and,  as  a  result,  they  have  a  lower  interest  rate,  and  it 
would  be  lower  even  than  it  is,  if  much  of  their  capital  was  not 
sent  away  from  home  for  purposes  of  investment.  In  Texas,  of 
course,  we  would  like  to  have  such  capital,  and  if  we  make  the 
field  attractive,  it  will  come  to  us  just  the  same  as  a  piece  of  iron 
will  fly  to  a  magnet,  but  we  should  remember  that  when  it  comes 
in  the  form  of  money,  it  represents  a  certain  amount  of  wealth 
that  has  been  created  and  stored  up  in  some  other  section  of  the 
world.  Let  us  use  the  example  of  a  manufacturer  of  farm  ma- 
chinery; if  out  of  his  business,  he  saves  ten  thousand  dollars  and 
by  investing  it,  it  finds  its  way  into  the  State  of  Texas  as  a  loan, 
and  at  the  same  time  his  farm  machinery  finds  its  way  into  the 
State  of  Texas,  it  would  be  quite  possible  to  take  his  money  loan 
and  purchase  one  of  his  farm  machines.  Now,  his  money  has 
gone  back  to  him,  and  we  have  kept  the  machine.  We  continue 
to  pay  interest  on  the  loan,  but  what  we  are  really  paying  for  is 
the  use  of  the  machine.  When  the  machine  is  used  up,  it  should 
have  produced  enough  to  have  paid  its  original  cost,  for  its  use 
and  leave  a  surplus.  If  this  could  be  said  of  all  capital  used  in 
farm  production,  it  would  not  be  long  until  the  State  of  Texas 
would  be  independent  of  outside  capital,  and  we  would  have  at 
home  more  lenders  than  we  have  borrowers.  At  least,  we  could 
cut  out  the  wasteful  method  of  borrowing  for  consumptive  pur- 
poses. 

We  pause  liere,  for  a  moment,  to  remark  that  we  have  no  sym- 
pathy with  the  idea  of  the  government  issuing  any  kind  of  cur- 
rency to  be  used  by  the  farmers  at  a  low  rate  of  interest.  Capital 
is  a  product  of  land  and  labor,  through  saving,  and  not  the  product 


v()  Bulletin  of  tlce  University  of  Texas 

of  a  printing  press  at  the  dictum  of  the  governmeui.  For  tiie 
individual  farmer,  going  to  town  with  a  full  'wagon  and  going 
home  with  an  empty  one,  will  reduce  the  interest  rate  quicker  than 
the  unanimous  dictum  of  all  the  solons  gathered  beneath  the 
capitol  dome. 

The  rate  of  interest  varies  with  the  demand  for  and  the  supply 
of  capital.  The  average  farmer's  dinner  table  is  not  overloaded 
but  too  often  supplied  from  the  commercial  world.  Bacon,  meat, 
butter,  canned  goods,  dried  fruit,  in  fact  everything  bought,  is 
capital  until  it  reaches  the  consumer  and  when  the  farmer  uses 
this  capital  from  the  commercial  world  he  must  expect  to  pay  in- 
terest and  commercial  profits  for  the  privilege.  A  good  method 
to  begin  with  to  lower  the  interest  rate  would  be  "to  live  at  home 
and  board  at  the  same  place.''  When  the  farmer  goes  to  town 
with  something  to  sell  on  each  trip,  he  enters  into  commercial 
exchange  where  one  form  of  capital  is  traded  for  another  and 
there  is  no  need  for  capital  to  carry  the  wasteful  credit  system 
which  now  exists.  Hence,  follows  a  less  demand  for  capital  and 
it  is  interpreted  in  terms  of  a  lower  interest  rate. 

Farm  Loans  in  Texas 

Up  to  the  present  point,  we  have  been  considering  the  general 
financial  situation  and  farm  credit  conditions.  Let  us  now  turn 
to  a  more  definite'  examination  of  the  financial  situation  in  which 
the  Texas  farmer  finds  himself. 

The  following  remarks  on  short-time  loans  to  farmers  are  based 
upon  evidence  gathered  in  110  different  cases  in  ten  different 
counties.  They  cover  the  years  1912,  1913,  and  1914.  The  total 
amount  of  the  loan  is  $27,779.00  or  an  average  of  $252.54  each. 
The  average  rate  of  interest  is  10  4/11%.  The  average  time  of 
the  loan  is  slightly  over  seven  and  two-fifths  months.  The  small- 
est loan  recorded  is  $20.00,  and  only  four  are  over  $600.00.  The 
interest  rates  vary  from  8  to  15  per  cent.  The  prevailing  rate  is 
ten  per  cent.  As  to  time  of  loans,  there  are  two  payable  on  de- 
mand, and  the  others  vary-  from  one  to  twelve  months.  The 
nature  of  the  security  given  for  these  loans  is  interesting.  Under 
the  heading  of  chattel  mortgage  or  lien  against  crop,  stock,  or 
cotton,    are    seventy-five    loans.      Personal    security    is    given    in 


Co'operation  in  Agricidture,  Marketing,  and  Rural  Credit     77 

eighteen  cases.  Note  and  endorsement,  which  is  the  same  thing, 
perhaps,  as  personal,  is  mentioned  in  four  cases.  Vendors'  lien 
is  mentioned  in  two  cases,  and  an  open  account,  in  one.  In  ten 
cases,  no  security  was  required.  The  purposes  for  which  the  loans 
were  made  are  worthy  of  note.  Supplies,  expenses,  and  to  make 
crop  are  given  in  seventy-one  cases;  to  pay  old  debts,  five  cases; 
cattle  and  feed  together,  seven  cases;  teams,  payment  on  land,  to 
make  improvement,  and  machinerj^,  two  each;  while  in  nineteen 
cases,  the  purpose  of  the  loan  is  not  given. 

We  have  compiled  another  table  of  twenty-five  loans  on  short 
time  to  renters  only.  These  loans  are  distributed  in  eight  differ- 
ent counties.  The  total  amount  of  the  twenty-five  loans  is 
$4949.75,  or  an  average  of  $197.59  each.  The  average  rate  of. 
interest  is  ten  and  one-seventh  per  cent.  The  average  time  for 
which  the  loan  runs  is  seven  and  nine-tenths  months.  In  three 
cases,  personal  security  is  given;  in  two  cases  the  landlord  has 
given  his  name;  in  two  cases  no  security  is  given;  and  in  eighteen 
cases  the  loan  is  secured  by  chattel  mortgage.  In  two  cases  the 
loan  was  used  to  pay  a  debt;  in  one  case,  to  buy  feed;  in  four 
cases,  the  purpose  is  not  given;  and  in  eighteen  cases  the  loan 
was  for  the  purpose  of  buying  supplies  or  making  the  crop.  Less 
than  one-fourth  of  the  loans  amount  to  more  than  $250.00  each. 

The  following  figures  refer  to  forty  real  estate  loans  in  eight 
different  counties.  The  total  amount  loaned  is  $115,521.00,  or 
an  average  of  $2,888.03  per  loan.  These  loans  were  granted  on 
an  estimated  security  of  $244,525.00.  The  amount  loaned  is, 
therefore,  forty-seven  and  one-fourth  per  cent  of  the  estimated 
value  of  the  real  estate  back  of  it.  The  average  rate  of  interest  is 
eight  and  one-fourth  per  cent,  and  the  average  time  of  the  loan  is 
twenty-six  and  three-fourths  months.  While  the  average  value 
of  the  loan  is  $2,888.03,  the  average  value  of  the  property  back 
of  the  loan  is  $6,113.13.  The  purpose  of  the  loan  in  five  cases 
was  for  improvements,  in  five  cases  for  vendor's  liens,  and  in 
twenty-seven  cases  to  purchase  land.  The  smallest  loan  recorded 
is  $150.00,  and  only  six  are  for  more  than  $4,000.00. 

In  comparison  with  the  farm  loans  given  above,  it  may  be  in- 
teresting to  give  the  figures  relating  to  fifty  loans  to  business  men 
located  in  nine  different  counties.  It  should  be  noted  here  that 
all  of  these  loans,  as  well  as  all  of  the  farm  loans  given  above, 


78  Bulletin  of  the  University  of  Texas 

are  located  in  not  more  than  ten  different  counties,  from  north  to* 
south  in  Central  Texas.  The  total  amount  of  the  loans  to  fifty 
business  men  is  $66,829.50,  or  an  average  of  $1,336.5-9  per  loan. 
The  average  rate  of  interest  is  a  shade  less  than  nine  and  one- 
half  per  cent.  Five  of  these  loans  were  payable  on  demand,  and 
the  average  time  of  the  other  forty-five  was  one  lumdred  ten  days. 
The  exact  use  of  these  loans  is  not  given,  but  nearly  all  of  them 
went  directly  into  the  business.  Ten  of  them  were  secured  with- 
out any  security  being  recorded,  and  twenty-nine  were  secured  on 
personal  security  with  endorsement  in  a  very  few  cases.  In  only 
seven  cases  is  chattel  mortgage  mentioned.  Thirty-one  of  these 
loans  were  for  less  than  $1,000.00,  nine  of  them  from  $1,000.00  to 
$2,000.00,  and  ten  of  them  over  $2,000.00. 

The  following  table  shows  into  what  divisions  the  one  hundred 
and  ten  short-time  loans  to  farmers  may  be  classed  so  far  as  the- 
amount  of  the  loan  is  concerned : 

Amount.  No.  of  Loans. 

Loans  below  $50 ^ 4 

$  50  to  $100 16 

$100  to  $150 24 

$150  to  $200 14 

$200  to  $250 13 

$250  to  $300 9 

$300  to  $350 S 

$350  to  $400 4 

$400  to  $450 ' 6 

$450  to  $500 5 

$500  to  $550 1 

$550  to  $600 5 

Over  $600  4 

Total  110 

Three  provisions  of  the  Rural  Credit  Law  as  it  now  stands  on 
Texas  statutes  are,  that  no  loans  shall  exceed  $200.00  in  amount, 
that  no  loans  shall  be  granted  for  longer  than  eight  months,  and 
that  the  rate  of  interest  shall  not  exceed  six  per  cent.  From 
the  one  hundred  and  thirty-five  loans  granted  to  farmers,  as  given 
above,  we  find  that  seventy-five  of  them  are  given  for  a  longer 
period  than  eight  months,  that  the  number  of  loans  exceeding 
$200.00  in  amount  is  sixty-one,  and  that  the  average  rate  of  in- 


Cooperation  in  Agriculture^  Marketing,  and  Bural  Credit     7^ 

terest  is  about  ten  and  one-fourth  per  cent.  The  discussion  of 
this  interest  rate  will  be  made  elsewhere,  but  it  should  be  noted 
here  that  if  a  credit  union  were  organized  under  the  present  law^ 
it  would  first  have  to  overcome  the  difficulty  of  taking  about  four 
per  cent  off  of  the  prevailing  interest  rate,  besides  granting  loans- 
for  a  shorter  time  than  is  now  customary  in  the  majority  of  cases- 
shown  by  our  figures,  as  well  as  being  compelled  to  give  less  as  a 
loan  than  is  now  given  in  over  forty-five  per  cent  of  the  cases. 
We  do  not  maintain  that  this  would  be  true  for  the  entire  state^ 
but  it  is  true  in  so  far  as  our  own  figures  are  concerned. 

There  is  little  need  that  we  should  spend  any  time  in  discussing' 
further  the  facts  which  are  brought  out  above  concerning  farm 
loans  in  Texas.  It  seems  evident  that  they  produce  sufficient 
grounds  for  a  campaign  for  improved  financial  conditions  with 
the  farmer.  It  should  be  remembered  that  the  statistics  from 
which  the  above  information  is  taken  were  not  furnished  by  the 
farmers,  but  were  furnished  by  the  bankers,  and  they  are  in  no 
way  biased  by  personal  opinion. 

Instead  of  discussing  our  present  conditions,  let  us  turn  our 
attention  to  a  discussion  of  how  the  farmer  may  remedy  the  situ- 
ation through  cooperative  action  and  association.  In  doing  this, 
we  shall  not  draw  upon  the  experience  of  the  European  farmers. 
If  the  reader  is  interested  in  what  they  have  done,  we  again  refer 
you  to  the  list  of  publications  in  the  back  of  the  bulletin,  which 
contain  full  information  on  all  systems  now  in  use.  It  appears 
that  it  will  be  well  for  us  to  use  an  example,  or  two,  of  success- 
ful financial  cooperation  in  this  country,  and  to  suggest  the  way 
in  which  the  present  Texas  Rural  Credit  Law  may  be  used  as  a 
basis  for  similar  organizations.  Since  the  examples  that  we  shall 
use,  as  well  as  the  Texas  Rural  Credit  Law,  are  concerned  with 
short-time  loans  to  farmers,  it  may  be  best  to  first  notice  one  or 
two  phases  of  long-time  or  real  estate  loans. 

Farm  Mortgages 

The  word  mortgage  comes  from  two  words.  The  first  is  the 
word  mors,  and  the  second  gage.  The  first  means  death,  and  the 
second  means  a  pledge.  To  a  certain  extent  in  our  own. country 
we  have  given  this  interpretation  to  the  word,  for  it  is  believed 


80  Bulletin  of  the  University  of  Texas 

particularly  where  a  man  has  at  one  time  had  the  ownership  of 
unincumbered  land,  that  if  he  puts  a  mortgage  on  it,  that  he 
has  really  given  the  death  pledge  to  some  of  his  future  hopes. 
It  is  quite  within  the  truth  to  say  that  mortgages  have  never 
been  looked  upon  with  any  degree  of  favor.  This  is  due  perhaps 
to  the  fact  that  most  mortgages  represent  either  unpaid  amounts 
for  the  land  held  in  possession  or  have  been  placed  upon  the 
land  when  there  was  dire  need  or  distress.  We  have  never  looked 
upon  the  mortgage  as  a  means  of  investment,  and  yet  there  are 
thousands  of  the  European  farmers  who  so  regard  them.  But 
there  are  many  differences  between  the  use  of  the  mortgage  privi- 
lege in  this  country  and  its  use  in  Europe.  Here  mortgages  run 
for  only  a  short  time.  Interest  is  usually  paid  each  yesLr  and 
the  sum  total  of  the  principal  at  the  end  of  the  stated  interval. 
It  too  often  follows,  therefore,  unless  there  is  shrewd  business 
management,  that  the  longer  the  obligation  stands,  the  more 
dreaded  is  the  day  when  the  principal  must  be  paid.  In  this 
country  there  is  personal  relationship  between  the  man  who  gives 
the  mortgage  and  the  man  who  loans  the  money  on  it.  In 
Europe  this  is  not  true.  In  Germany,  the  Landschaften  Society 
with  its  bonds  issued  against  mortgages  stands  between  the  bor- 
rower and  the  lender.  Mortgages  run  for  a  much  longer  period 
of  time  than  in  this  country;  for  example,  twenty-five  to  seven- 
ty-five years.  The  German  pays  his  interest  as  it  is  paid  in  this 
country,  but  when  he  pays  his  interest  he  also  pays  a  certain  frac- 
tion of  the  principal  each  year  so  that,  at  the  end  of  a  certain 
period,  he  has  not  only  paid  his  interest  regularly,  but  he  has 
made  enough  payments  on  the  principal  to  completely  wipe  that 
out.  It  follows,  therefore,  that  he  does  not  dread  the  coming  of  a 
iime  when  he  shall  have  to  pay  the  sum  total  of  the  principal. 
The  same  amount  is  paid  each  year,  but  the  annual  payment  in- 
cludes not  only  the  interest  but  also  the  amount  which  goes  toward 
paying  off  the  principal.  The  following  table,  called  an  amorti- 
zation table,  shows  how  $1,000.00  may  be  repaid  by  an  annual 
payment  of  $70.00  in  twenty-six  year?,  the  rate  of  interest  being 
five  per  cent: 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     81 

Years.  Interest.     Amortised.  Balance  Due. 

1  $50  00       $20  00       $980  00 

2  49  00  21  00  959  00 

3  47  95  22  05  936  95 

4  46  85  23  15  913  80 

5  45  69  24  31  889  49 

6  44  47  25  53  863  96 

7  43  30  26  80  837  16 

8  41  86  28  14  809  02 

9  40  45  29  55  779  47 

10  38  97  31  03  748  44 

11  37  42  32  58  715  86 

12  35  79  34  21  681  65 

.13  34  08  35  92  645  7.3 

14  32  29  37  71  608  02 

15  30  40  39  60  568  42 

16 28  42  41  58  526  84 

17  26  34  43  66  483  18 

18  24  16  45  84  437  34 

19  21  87  48  13  389  21 

20  19  46  50  54  338  67 

21  16  93  53  07  285  60 

22 14  28  55  72  229  88 

23 11  49  58  51  171  37 

24  8  57        61  43        109  94 

25  5  50        64  50         45  44 

26  2  27        67  73  0  00 

On  a  previous  page  it  was  stated  that  the  average  time  for 
forty  real  estate  loans  in  Texas  was  less  than  twenty-seven 
months.  It  will  be  noticed,  therefore,  that  the  farm  loans  granted 
under  the  amortization  plan  used  in  this  table  run  for  about 
twelve  times  as  long  as  the  average  of  our  forty  Texas  loans.  In 
the  case  of  a  Texas  loan,  the  principal  which  is  paid  at  maturity 
is,  perhaps,  a  greater  problem  than  the  high  rate  of  interest..  The 
importance  of  this  subject  of  real  estate  loans  in  Texas  may  be 
well  brought  out  in  a  brief  way  by  reference  to  some  figures  con- 
tained in  the  last  census.  The  increase  in  the  number  of  mort- 
gages without  any  improvement  in  the  system .  of  dealing  with 
them  seems  to  demand  greater  attention. 

A  supplement  to  the  1910  census  says  for  the  State  of  Texas: 
"The  number  of  all  farms,  and,  therefore,  of  all  farm  operators, 
is  417,770.     Of  the  farm  operators,  195,863  are  classified  as  own- 


82  Bulletin  of  the  University  of  Texas 

ers,  2,332  as  managers,  and  219,575  as  tenants.  Of  the  owners, 
167,515  operate  exclusively  land  owned  by  them,  while  28,348 
operate  land  which  they  rent  in  addition  to  that  which  they  own. 
The  tenants  are  classified  according  to  the  character  of  their  ten- 
ancy; thus  184,753  are  share  tenants;  8,639  share-cash  tenants; 
17,549  cash  tenants;  while,  for  8,634,  no  report  relative  to  char- 
acter of  tenure  was  secured. 

"While  the  total  number  of  farm  operators  increased  from  228,- 
126  in  1890  to  417,770  in  1910,  an  increase  of  83.1%,  the  number 
of  tenants  increased  from  95,510  to  219,575,  or  129.9%.  The  pro- 
portion of  tenants  has  increased  from  37.6%  of  all  farmers  in 
1880  to  52.6%  in  1910." 

The  average  number  of  acres  in  a  farm  in  1900  was  357.2,  and 
in  1910  it  was  269.1,  a  decrease  of  88.1  acres  or  24.7%.  The 
average  value  per  acre  in  the  former  year  was  $4.70,  in  the  latter 
year  it  was  $14.53. 

Of  the  195,863  ow^ned  farms*,  as  given  above,  128,082  or  66.7%? 
were  free  from  mortgage;  64,005  or  33.3%  were  mortgaged. 
There  have  been  no  census  figures  collected  on  exactly  the  same 
basis,  but  they  have  been  collected  on  the  basis  of  owned  farm 
homes,  for  both  1890  and  1900.  In  1890,  94.3%  of  our  owned 
farm  homes  were  free  from  mortgage,  and  only  5.7%  were  mort- 
gaged. In  1900,  76.6%  were  free  from  mortgage  and  23.4%  were 
mortgaged.  It  is  approximately  correct  to  say  that  the  percent- 
age of  mortgages  ow  owned  farms  and  farm  homes  was  increased 
from  5.7%  in  1890  to  33.3%  in  1910.  It  is  true  also  to  say  that 
"the  absolute  increase  in  the  number  of  mortgaged  farms  was 
greater  than  that  in  the  number  free  of  mortgage." 

The  number  of  fai^ns  in  the  state,  as  given  above,  is  417,770. 
Of  this  number,  334,765  have  not  more  than  174  acres,  and  the 
remainder  83,005  have  more  than  174  acres.  The  Texas  Home- 
stead Law  is  supposed  to  prevent  a  homestead  of  less  than  200 
acres,  having  a  mortgage  put  upon  it.  No  figures  are  available 
as  to  how  many  farms  there  are  having  between  174  and  200 
acres,  but  it  is  certain  that  the  homestead  law  would  apply  to 
something  less  than  83,005  farms,  because  there  is  only  that  num- 
ber having  more  than  174  acres  in  them.  But  as  stated  above, 
we  have  64,005  mortgaged  farms.     It  appears,  therefore,  that  in 


Cooperation  vn  Agriculture,  Marketing ,  and  Rural  Credit     83 

1910  out  of  a  total  of  417,770  farms,  all  farms  that  it  was  possi- 
ble to  mortgage  were  mortgaged  except  18,997. 

In  1910  of  the  owned  farms,  one  in  every  three  was  mort- 
gaged. If  there  were  only  83,005  farms  that  could  be  mortgaged, 
and  one  in  every  three  was  mortgaged,  then  we  had  only  27,668 
mortgages,  but  the  census  says  we  had  64,005  mortgaged  farms. 

This  situation  is  made  clear  if  we  take  the  vendor's  lien  into 
consideration.  As  is  generally  known,  the  homestead  exemption 
does  not  apply  when  the  debt  is  due  for  the  purchase  money  or  a 
part  of  it.  What  is  made  clear  is  that  only  two  of  "every  three 
farms  were  free  of  incumbrance. 

Jewish  Farmers'  Cooperative  Credit  Unions 

It  is  not  generally  known  that  among  the  Hebrews  of  the 
United  States  there  are  several  thousand  farmers,  but  it  is  true 
that  the  Jewish  people  are  going  more  and  more  from  the  sweat 
shops  of  the  cities  and  from  the  commercial  lines  of  work  that 
they  have  followed  in  the  past  to  the  open  country  and  agricul- 
tural pursuits.  It  is  true  also  that  they  are  carrying  with  them 
the  same  thrift,  industry,  and  business  management  for  which 
they  have  long  been  famed.  In  fact  it  has  been  true  in  numerous 
instances  that  they  knew  much  more  about  the  business  side  of 
farming  tlian  they  did  about  the  practical  work,,  but  the  success 
which  they  have  attained  is  worthy  of  admiration,  and  the  benefits 
their  financial  success  seems  so  assured  that  a  short  account  of 
the  financial  success  seems  so  assured  that  a  short  account  of 
what  they  have  been  able  to  do  and  are  doing  ought  to  be  of  serv- 
ice to  Texas  farmers. 

The  Jewish  Farmers'  Cooperative  Credit  Unions  have  a  valid 
claim  to  being  the  pioneers  in  this  field  in  America.  Eeferring  to 
the  establishment  of  a  union  in  Massachusetts  in  December,  1913, 
one  of  their  reports  says:  "This  Union  enjoys  the  distinction  of 
being  the  first  agricultural  credit  union  in  Massachusetts,  not- 
withstanding the  fact  that  the  Credit  Union  Law  of  that  state 
has  been  on  its  statute  books  since  September,  1909.  There  are 
over  twenty  Credit  Unions  in  Massachusetts,  but  they  are  all 
urban  or  industrial.'* 

So  far  as  the  record  shows,  there  have  been  no  losses  on  the 


84  Bulletin  of.  the  University,  of  Texas 


of  the  University  oi 


part  of  any  of  the  credit  unions,  excepting  in  one  case  and  that 
was  due  to  the  fact  that  the  union  had  its  funds  deposited  with  a 
national  bank  and  the  bank  failed. '-i^';^'^!^"^  ^"'^^^  ^W%i- 

Mr.  Geo.  W.  Simon,  Western  Agen^  of  iKe'Jewisfr'Algricultural 
and  Industrial  Aid  Society,  gave  a  most  interesting  address  at 
the'First  National  Conference  on  Markets  and  Farm  Credits,  held 
in  Chicago,  in  April,  1913.  He  referred  to  the  fact  that  this 
Society,  during  an  existence  of  fourteen  years,  had  made  loans  to 
Jewish  farmers  in  twenty-eight  different  states,  to  2,568  farmers, 
amounting  to  $1,494,437.91.  This  refers  to  loans  made  on  second 
01  third  mortgages,  up  to  the  value  of  eighty  or  ninety  per  cent 
of  the  real  estate  owned.  Such  loans  were  made  for  productive 
purposes  only,  and  really  added  to  the  value  of  the  farm.  The 
Society  has  collected  back  twenty-six  per  cent  of  the  outstanding 
money.  Last  year,  they  collected  $100,000.00  in  interest  and 
principal.  In  addition  to  this,  the  borrowers  had  paid  other  peq- 
ple  about  twice  that  amount  on  prior  obligations,  -which  means 
that  the  people  must  have  saved  about  $300,000.00  in  the  one 
year.  The  third  annual  report  of  these  Unions  varies  from  these 
figures  slightly  by  saying:  "In  fourteen  years  that  the  Society 
has  been  in  existence,  it  has  granted  2,800  loans,  aggregating 
about  $1,800,000.00.  These  loans  were  made  to  2,500  Jewish 
farmers. in  thirty-one  States  and  in  Canada.^V  Mr.  Simon  states 
that  the  rate  of  interest  on  these  mortgage  loans  is  foux  per  cent, 
:and  that,  iii  many  cases,  the  people,  had  previously,  {pia?(d.  twelv^ 
per  cent  besides  the  bonus.  After  this  modified  Credit  Foncier 
bank  had  been  in  existence  for  some  time,  it  was  foun4  out  that  it 
was  not  suitabk  for  furnishing  short- time  loans, for  sueh  pur- 
poses as  cancelling  old  debts,  buying  seeds,  or  fertilizer,  and  pay- 
ing for  labor.  The  next  step  was  the  organization  of  the  modifi- 
cation of  the  Eaiffeisen  banking  system.  Mr.  Simon  continued : 
.  r"We  come  to  a  community,  for  instance,  where  there  are  twenty 
or  twenty-five  farms,  and  let  thenj  subscribe:  shares,  ;$6.00  each 
share.  If  a  community  will  raise  $500,  we  advance  to  this  com- 
munity, this  small  organization,,  twice  the  amount  raised,  that  js 
M,0()0,:jThey  are  all  jointly  responsible  for  this  $1,000.  We 
[knew^/  in  the  first  place,  they  were  good  enough.;,  wo- sinvply-rdisr 
counted  their  moral  character."  .':.hnubai  io  tiK^in 

■,"¥ow,  this  small  community  hadv. a  snraU  capital, p, say,. -^$1500, 


Cooperation  in  Agriculture,  M'arlceiing/dhd  Kural  Credit     85 

g.moiig  its  twenty  farmers,  to  ^  loan  m»  case  of  necessity.  Wny  aia 
we  organize  these  small  banks  ?  The  trouble  "is,  wherb  it  coines 
to  a  large  loan  we  could  easily  reach  every  one,  because  everything 
is  under  the  personal  supervision  of  our  agents,  but  on  small 
loans,  we  decided  they  can  reach  each  other  better  than  we  can 
do;  we  wanted  to  teach  them  to  govern  themselves,  and  the  result 
was  that  we  have  organized  these  credit  unions  under  the  KaiSei- 
sen  system.  After  they  had  the  capital  of  $1500,  they  were  ad- 
vancing small  loans,  not  to  exceed  $100,  to  each  other,  among  fKe 
members,  and  charging  six  per  cent  interest/^  ' 

The  third  annual  report  referred  to  above  says:  "In  1909 
the  "soeiety  was  prepared  to  attack  the  problem  definitely  and  it 
was  then  and  there  decided  to  organize  these  Credit  Unions  as 
unincorporated  or  voluntary  associations.  Meanwhile  the  spirit 
of  cooperation  was  growing  among  the  Jewish  farmerS:  and  the 
ground  work  was  being  laid  for  these  Credit  Unions  through  the 
organization  of  many  local  Jewish  farmers'  associations  and  their 
federation  into  the  Federation  of  Jewish  Farmers  of  America." 

"The  first  credit  union  commenced  business  in  May,  1911;  3 
were  organized  that  year,  5  in  1912,  and  9  in  1913,  making  a 
total  of  17  in  operation.  Eight  of  these  are  located  in  New  York^ 
5  in  New  Jersey,  and  4  in  Connecticut.  Each  of  them  raised 
$500  or  more  from  the  sale  of  shares  to  members  and  the  Aid 
Society  loaned  them  each  $1000^  with  which  to  begin  operations. 
The  form  of  organization  of  these  Credit  Unions  is  similar  to 
that  of  the  Eaiffeisen  banks — after  which  most  cooperative  credit 
institutions  the  world  over  are  patterned — in  so  far  as  that  system 
could  be  adapted  to  American  conditions  and  to  the  peculiar  needs 
of  the  situation." 

Mr.  Leonard  G.  Eobinson,  who  has  been  a  leader  in  the  work 
of  instructing  and  organizing  the  Jewish  farmers,  gives  the  fol- 
lowing description  of  the  Unions:  "Shares  in  these  Credit  Unions 
are  $5.00  each,  and  the  holder  of  one  share  has  the  same  voice 
and  the  same  rights  as  the  holder  of,  say,  one  hundred  shares. 
Membership  in  the  Unions  is  open  only  to  members  in  good 
standing  of  the  local  Jewish  farmers'  association.  The  entire 
membership  of  a  Credit  Union  constitutes  the  General  Assembly, 
which  has  the  final  decision  on  all  questions.     The  direct  manage- 

^Interest  rate  charged  on  this  $1000  is  2  per  cent. 


86  Bulletin  of  the  University  of  Texas  * 

ment  is  in  the  hands  of  a  board  of  directors  consisting  of  the  presi- 
dent, vice-president,  secretary,  and  treasurer,  who  also  constitute 
the  Credit  Committee,  and  are  in  complete  charge  of  the  granting 
of  loans,  and  three  other  members  who  constitute  the  Supervisory 
Committee.  The  members  of  the  board  of  directors  are  not  eligi- 
ble to  borrow  except  by  a  two-thirds  vote  of  the  General  Assembly 
in  each  instance.  The  loans  are  granted  only  for  productive  pur- 
poses or  urgent  needs.  They  are  not  granted  for  a  period  exceed- 
ing six  months  nor  for  an  amount  exceeding  $100.  Interest  is 
charged  at  the  rate  of  six  per  cent.  The  security  is  determined 
by  the  Credit  Committee,  and  is  generally  a  promissory  note  with 
one  or  more  responsible  endorsements.  Initiation  fees  and  other 
charges,  also  so  much  of  the  net  profits  as  has  not  been  distributed 
as  dividends,  constitute  the  Eeserve  Fund  of  the  Credit  Unions." 
Then  he  adds  the  following  significant  paragraph: 

"It  is  little  early  at  this  stage  to  attempt  a  discussion  of  these 
pioneer  credit  banks  on  American  soil.  Some  of  the  effects  re- 
sulting from  an  adequate  system  of  cooperative  credit  have  even 
at  this  early  date  manifested  themselves  in  the  communities  in 
which  these  Credit  Unions  were  established.  The  pernicious 
activity  of  the  local  usurer  has  been  largely  curtailed.  The  ar- 
rogance of  the  local  storekeeper  is  in  evidence  no  longer,  and  the 
farmer  is  now  treated  as  a  respected  customer.  The  Credit  Unions 
have  endowed  their  members  with  a  high  sense  of  mutual  respon- 
sibility, and  have  stimulated  them  to  further  effort  in  the  direc- 
tion of  cooperation  and  mutal  self-help.'^ 

This  was  written  about  a  year  before  the  following  figures  on 
achieved  success  were  given  out:  "The  table  below  contains  a 
report  of  the  operations  and  financial  statement  of  these  Credit 
Unions  for  September  30,  1913.  As  will  be  observed,  they  have 
an  aggregate  membership  of  517  and  a  capital  of  $9,165.  They 
have  been  in  operation  for  periods  averaging  a  little  over  thirteen 
months,  during  which  time  they  loaned  out  $73,624.66,  about  eight 
times  their  capital.  Their  net  profits  amount  to  $1,317.93;  that 
is,  at  the  rate  of  13|  per  cent  per  annum  on  their  capital." 

One  writer  (Mr.  Isaac  F.  Marcosson)  who  has  studied  this 
practical  system  says,  "it  proves  beyond  a  doubt  that  the  whole 
harrassing  problem  of  rural  credits  does  not  need  legislation  as 
much  as  it  needs  real  leadership."     As  Mr.  Simon  said  in  Chicago, 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     87 

"If  you  follow  up  the  same  system  with  experienced  farmers,  I 
am  sure  you  can  obtain  much  better  results  than  we  have  ob- 
tained; only,  go  and  do  it." 

OPERATIONS  OF  THE  JEWISH  FARMERS'  CO-OPERATIVE  CREDIT 

UNIONS    SINCE   THEIR.  ORGANIZATION,   UP   TO 

SEPTEMBER  30,   1913. 

Places  Where  Formed.  Commenced  Business. 

Fairfield,    Conn May,  1911 

Ellington,    Conn May,  1911 

Rensselaer,   N.    Y May,  1911 

Briggs  St.,  N.  Y March,  1912 

I^banon,  Conn. March,  1912 

Colchester,   Conn April,  1912 

Fallsburg,  N.   Y^ April,   1912 

Hurleyville,  N.   Y May,  1912 

Hightstown,  N.  J January,  1913 

Parksville,  N.   Y January,  1913 

Woodbine,  N.  J February,  1913 

Carmel,  N.   J February,  1913 

Flemington,  N.  J March,  1913 

Perrineville,  N.  J April,  1913 

Ellenville,  N.  Y April,  1913 

Maplewood,  N.  Y April,  1913 

Stevenville  and  Ferndale,  N.   Y April,  1913 

TOTALS. 

Number  of  members 517 

Number  of  shares  outstanding 1,833 

Number  of  loans  granted 1,103 

Amount  of  loans  granted $73,624  66 

Number  of  loans  repaid 754 

Amount  of  principal  collected $50,816  11 

Amount  of   loans  outstanding $22,808  55 

Interest  collected    $1,900  35 

Expenses    $726  93 

Total  assets $27,487  56 

Total    liabilities    $26,169  63 

Assets  over  liabilities ' $1,317  93 

The  Catawba  Rural  Credit  Association 

Catawba  county,  North  Carolina,  is  referred  to  by  well  known 
writers  as  being  one  of  the  progressive  rural  counties  of  the 
South.     It  is  interesting,   therefore,   to  find   out   what   they   are 


88  Bulletin  of  the  University  of  Texas 

attempting  to  do  along  the  lines  of  rural  credit.  The  Catawba 
Rural  Credit  Association  of  Hickory,  North  Carolina,  was  organ- 
ized January  3,  1914,  and  embraces  four  counties.  The  list  of 
officers  of  this  association,  as  set  forth  in  the  printed  copy  of 
their  constitution  and  by-laws,  includes  a  President,  Vice-Presi- 
dent, eight  Directors,  and  a  Secretary-Treasurer.  It  is  worthy  of 
note  that  six  of  these  officials  get  their  mail  via  R.  F.  D.  The 
constitution  provides  for  an  annual  meeting  of  the  stockholders, 
at  which  time  the  eight  Directors  are  elected  by  a  plurality  vote. 
Upon  request  of  one-third  of  the  stock,  the  Directors  shall  call 
a  special  meeting.  Proxy  voting  is  permissible,  if  authorized  in 
writing  and  filed  with  the  Secretary,  and  each  share  is  entitled 
to  one  vote.  A  quorum  consists  of  all  the  stockholders  reporting 
either  in  person  or  proxy  a  majority  of  outsanding  shares  of  stock. 
Each  stockholder  is  to  be  notified  seven  days  in  advance  of  any 
special  meeting.  Stockholders  must  be  of  legal  age  and  sign  the 
by-laws. 

The  Board  of  Directors  manages  the  affairs  of  the  Association. 
They  have  power  to  fill  vacancies  in  their  body  until  the  next 
annual  meeting  of  the  stockholders.  "The  Board  of  Directors 
shall  have  power  to  employ  agents,  factors,  clerks,  workmen,  and 
attorneys;  to  fix  their  compensation;  to  prescribe  their  duties,  to 
dismiss  any  officer  or  agent  without  previous  notice;  and  generally 
to  control  and  manage  the  affairs  of  the  Association."  The  Di- 
rectors have  power  to  loan  to  members  of  stockholders  upon  first 
lien  on  farm  property  or  lands  situated  in  any  of  the  four  coun- 
ties, and  on  the  paid-in  value  of  the  stock.  They  also  have  the 
power  to  issue  any  classes  of  stock  which  they  think  to  be  for  the 
best  interest  of  the  Association.  "They  shall  have  power  to  reg- 
ulate the  fees,  dues,  fines,  forfeitures,  time  of  maturity  of  shares, 
the  amount  and  time  of  payment  of  installments  on  shares,  the 
form  of  mortgages,  the  amount  of  insurance  required  on  prop- 
erty offered  as  security  for  loans,  and  generally  to  do  any  other 
thing  they,  in  the  exercise  of  a  wise  discretion,  may  deem  for  the 
best  interest  of  each  and  every  stockholder  of  the  Association." 
The  President,  Vice-President,  Secretary-Treasurer,  and  such  loan 
and  investigating  committees  as  are  deemed  advisable  are  elected 
annually  by  and  from  the  Board  of  Directors.  The  Directors  also 
determine  the  amount  and  form  of  the  bond  required  of  all  offi- 


Cobperation  in  Agriculture,  Marketing ,  and  Rural  Credit     89 

cials  having  access  to  any  funds.  The  President  executes  ail 
agreements,  and  signs  all  certificates  of  stock.  The  constitution 
can  be  amended  either  in  a  regular  or  special  meeting. 

The  by-laws  of  the  Association  provide  that  each  share  shall 
have  a  par  value  of  $100,  and  shares  are  issued  quarterly.  The 
entrance  fees  are  fifty  cents  per  share.  Two  classes  of  shares  are 
provided  for:  installment  shares  and  dividend-bearing,  advance 
paj^ment  shares.  "On  each  installment  share,  there  shall  be-  paid 
one  dollar  per  month  as  monthly  dues,  on  or  before  the  first  day 
of  each  month  until  by  the  payments  so  made  and  the  profits 
accumulated  thereon  the  said  share  shall  have  attained  the  par 
value  of  $100.^^  Dividend-bearing,  advance-payment  shares  are 
sold  for  a  single  payment  of  $90,  and  participate  in  profits  and 
losses  with  the  installment  shares.  The  advance-payment  shares 
are  entitled  to  a  four  per  cent  per  annum  dividend.  Such  divi- 
dends are  paid  semi-annually,  and  charged  against  the  profits  due 
to  the  shares.  When  with  the  $90,  and  the  profits  on  the  same 
after  the  dividends  are  deducted,  the  amount  shall  equal  $100, 
the  share  is  declared  matured  and  payable.  This  second  class 
of  shares  cannot  exceed  twenty-five  per  cent  of  the  first.  All 
other  terms  and  conditions  of  advance-payment  shares  are  left  to 
a  resolution  by  the  Board  of  Directors.  On  March  14,  1914,  they 
adopted  a  resolution  which  provides  that  the  above  conditions  shall 
be  enforced,  provided  the  stock  remains  in  force  not  less  than  six 
months,  and  in  event  of  the  withdrawal  of  the  stock,  the  four  per 
cent  shall  be  in  lieu  of  all  profits  or  interest  on  the  stock.  This 
stock  may  be  withdrawn  upon  ninety  days'  notice  in  writing,  and 
the  Directors  have  the  power  to  retire  it  at  any  time  after  it  is 
three  years  old.  In  case  of  this  forced  retirement,  the  owner  is 
entitled  to  receive  the  amount  paid  for  the  stock  plus  the  profits,, 
after  the  four  per  cent  has  been  deducted.  The  advance-payment 
stock  cannot  be  assigned  or  transferred  except  on  written  notice.. 
Loans  are  made  at  the  monthly  meetings  of  the  Directors.  The 
Directors  appoint  an  attorney  for  the  Association  and  make  a 
contract  with  him  concerning  fees.  His  charges  for  making 
search  of  title  or  handling  any  papers  connected  with  a  loan  are 
paid  by  the  person  applying  for  the  loan.  Property  offered  as 
security  is  examined  by  a  committee  of  three  stockholders,  ap- 
pointed  by  the  Director-s   for  each   township.     Tn   case  a   share- 


00  Bulletin  of  the  University  of  Texas 

holder  neglects  to  pay  monthly  dues  on  the  day  the  payment  is 
due,  there  is  assessed  a  fine  of  ten  cents  on  each  share  for  each- 
month  the  dues  remain  unpaid.  Shareholders  in  arrears  cannot 
vote,  and  membership  ceases  when  the  monthly  fines  amount  to 
the  sum  paid  as  dues  and  have  not  been  paid  on  any  share  on 
which  loans  have  not  been  made.  Shares  may  be  transferred  for 
•a  fee  of  ten  cents  on  each  share  of  unincumbered  stock,  and  a 
fee  of  twenty-five  cents  for  each  share  of  encumbered  stock.  The 
purchaser  is  held  liable  for  such  fees.  The  certificate  of  mem- 
bership is  signed  by  the  President  and  Secretary,  and  bears  the 
seal  of  the  Association.  "Shareholders  in  good  standing  may  bor- 
row ninety  per  cent  of  the  paid-in  value  of  their  shares  by  trans- 
ferring their  shares  to  the  Association  as  security;  paying  six  per 
•cent  interest,  and  continuing  the  payment  of  their  monthly  dues." 
Shareholders  are  entitled  to  loans  upon  three  kinds  of  security: 
first,  bond  and  first  lien  trust  deed  on  farm  land;  second,  the 
assignment  to  the  Association  of  the  certificate  of  membership 
to  the  extent  of  one  share  for  each  $100  borrowed;  and,  third, 
fire  insurance  policy  for  such  sum  as  the  Directors  may  require." 
Second  or  subsequent  deeds  of  trust  may  be  used  as  security  if 
the  prior  mortgages  are  also  held  by  the  Association.  Loans  shall 
not  be  made  in  excess  of  two-thirds  of  the  value  of  the  property. 
A  description  of  the  property  to  be  given  as  security  must  accom- 
pany an  application  for  a  loan.  Loans  are  made  only  when  the 
reports  of  the  appraisers  and  the  attorney  who  examines  the  title 
are  approved.  The  interest  commences  on  the  day  the  loan  is 
made,  and  is  paid  at  the  same  time  as  the  monthly  dues.  The 
borrower  may  cancel  his  obligation  and  obtain  the  collateral  held 
by  the  Association  as  security  after  paying  principal  and  interest, 
but  thirty  days'  notice  must  be  given,  and  the  Board  of  Directors 
may  waive  such  notice.  In  such  cases,  a  release  fee  of  twenty-five 
cents  is  collected  on  each  share.  In  case  the  borrower  fails  to 
pay  monthly  dues  for  ninety  days  the  Association  may  order  the 
sale  of  the  property.  Proceeds  are  to  be  used  in  the  payment  of 
iaxes  and  assessments;  to  defray  expenses  of  selling;  to  pay 
amount  due  the  Association  as  secured  by  the  trust  deed;  and  if 
any  remains  it  is  given  to  the  member.  ^sTinety  days'  written 
notice  must  be  given  to  the  Directors  before  the  shareholder  can 
withdraw  his  funds.     At  time  of  withdrawal  the  member  receives 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     91 

the  monthly  dues  which  he  has  paid  in,  minus  charges  against 
him.  In  case  of  death,  the  heirs,  or  regular  representatives  of  the 
shareholder,  may  continue  the  payments  on  unredeemed  shares 
and  with  the  consent  of  the  Directors,  they  may  have  the  de- 
ceased's unredeemed  shares  cancelled.  No  amendment  to  the  by- 
laws may  be  passed  unless  submitted  in  writing  one  month  previ- 
ous to  action  and  then  only  by  a  two-thirds  vote  of  all  the  Di- 
rectors. 

We  have  gone  into  the  above  details  concerning  this  one  at- 
tempt at  securing  better  credit  for  the  southern  farmer  not  be- 
cause of  the  proven  success  of  the  venture,  but  because  the  plan 
and  system  of  organization  and  control  cover  in  such  a  definite 
wiay  so  many  of  the  problems  which  must  be  met  in  most  any  com- 
munity when  the  actual  work  of  organization  is  attempted. 

The  fact  should  not  be  lost  sight  of  that  loose  control  in  bank- 
ing and  monetary  affairs  in  the  past  has  cost  different  sections  of 
the  country  years  of  tribulation.  It  is  well  therefore  that  in  the 
future  all  details  should  be  carefully  thought  out. 

How  to  Form  a  Cooperative  Credit  Union  Under  the  Texas  Law 

Get  together  ten  or  more  men  of  the  community  who  have  the 
welfare  of  the  community  at  heart;  men  who  have  among  other 
characteristics,  thrift,  honesty,  and  the  ability  to  read  and  write. 
It  is  not  necessary  that  they  have  any  money.  Elect  a  chairman, 
secretary,  and  treasurer;  discuss  the  importance  of  knowing  more 
about  the'  problems  of  the  community ;  plan  for  a  series  of  meet- 
ings; get  acquainted;  learn  to  work  together;  don't  talk  about  be- 
coming your  own  banker.  Talk  about  cooperating  with  each  other 
and  becoming  better  farmers.  Ask  the  Division  of  Public  Welfare 
of  the  University  of  Texas  to  send  you  literature  describing  the 
University  Home  and  School  League,  and  the  various  kinds  of 
farmers'  clubs  that  are  doing  effective  work  in  other  places.  Ap- 
point a  time  for  a  meeting  to  discuss  the  provisions  of  the  Eural 
Credit  Union  Law  as  it  stands  in  Texas  at  the  present  time. 
Provide  for  the  dues  for  your  present  association.  Have  the 
treasurer  hold  such  dues  as  a  fund  belonging  to  the  society.  Let 
such  monthly  dues  be  an  encouragement  to  saving.     Study  that 


9t  Bulletin  of  the  University  of  Texas 

Ihaifigi;  a^^i'iisib  Hinum  ,fii  bixjq  sfj'ii  oil  lioifiv/  ^-iub  vlflhioni  oifi 
p^f t, ^t ,^t^;.|^pa:£^t^|a;r^  ,^^iii  joi^,  hj ;  the , ;][jrni'\^eT^j1?jr, ,  ^J^9^, f^^ls t :p| 
^.,,plac,e^MT(^)ie?:^H:^ai^ifter^,^re  orga^^zed  to.,h^^  ea(?h  pth^r  save. 
IfjQlir  cpjD^]piui;iity  4s,  C|iie  ia  >^iWiti  ^Vpi'y  cent  must  county  invest 
yQ^r,I^H(^  Tfhiqhiisa^cumuilatediftQm  such  dues,  when  such  funds 
aTe,l-arge,,en,9ug|ii  i^a.^some  ,way  .so ;  that  they  will  continue  to  grpw^ 
J^opr  ,^^iiqplei^,iji,^^,  c^; ,<)?•,, pig, J. and  ^exmi;\^.^iil^e<^j^^T^^^ 
turn  about  taking  care  of  same.  This  may  seem  like  too  small  a 
mattei;,  to;  begin  ;.w;^th,  but,  jqi^  m]ist  begin  somewhere  or  ne/ver 
h^jsre|,,^ytJwQgi  sf^Y^^^^.Q^d^,^  i^  .^iit^r.^to  begin  4^  a  smaH^ 
tjia^  to ,  cqrae.  (^pwn  to  the  close  of  life  without  anything.  Begin 
9njiaf.i^rgej,ai,scajl^  asj;)ossible;.  but  if  you  have  nothing,  begin  any- 
37^y,,  ,^]^  .,t|^^^  :|^e^;?,,,t^,i][ie^^.,t|}ef,g9];nn^issio,ne:^  ,oJf  Insurance  and 
Banking  at  Austin  will  furnish  you  with  a  copy  of  the  l^w  which 
pe,rn;iit^ ;  tl^e  inpprppr^tion ,  of  i;he  .Eura^l  pr^diX  ,  IJi;ijons.  ,  Hav|e  a 
n^eej^g  ,to  diSQU^Si  jthp  ya:^ious,,|^atuj-e^  ^ith^,  Iw  .,,iPop';t,,be  in 
a  hurry  to  ask  for  a  charter  from  the  Commissioner  of  Banking. 
The  law  won^t  proyide  any,,li,iOGey  for.  you.  It,  merely  explains  how 
to  conduct  business.  The  law  provides  that  the  credit  union  shall 
have  shares  of  $25  each.  It  may  be  before  the  credit  union  is 
ready  for  its  charter  that  the  fund  of  the  association  built  up  from 
the  dues,  or  from  the  iiivestment  that  has  been  made  of  them., 
will' '  loe '  a  '  stifficii^iit  arbpiiht  to  pay  the  first  installment  of  such 
shires.  'It  may  b'e  eVeh  possible  that  since  at  least  ten  members 
are  required,  that  yolir  common  fund  belonging  to  the  society  may 
aih'ount'  to  $250,  or  enough  'to 'b'uy  one  share  'fbi*  ^abH  of  ^^t  ten 
niembers.  This  takes  for  granted  llhat  you  have  found  'a  treas- 
urer to  whorn  you  are  willing  to  intrust,  without  bond,  at  least 
^^'50' eii^^r  ili^nad^^^^  If  out  of'tfen  men  foiimnhht 

find  such ' a  tireasiirery  there  is  very  little' uSe  to  talk  alDOut'a'rural 
credit  union,  even  if  organized  under  the  strongest  law  possible^ 
fbir^  a!^'  tJie  fainpiis  financier  s'did,  *^t!haracter  is  the  ba^is  6f'  credit.'* 
It  migtt  be  added  here  that  there  are  among  those  who  have 
studied  the  rural  credit  institutions  of  Europe,  where  they  have 
tAM^  s^icfi'a'mtii^eldu^''su'cicedsj  thclsie  who  would'  lik^  to  separate 
the  financial  side  from  the  moral  side.  It  would'  seem  decidedly 
unwise  to  do  sP,  as  badly  as  the  farmer  may  lieed  cheaper  money, 
there  are  Pther  things  that  must  riot  be  lost  sight  of.  Among 
these  are  the  personal  characteristics  of  industry,  intelligence, 
stability,  and  honesty.     Upon  these  things  as  a  basis  the  farmers 


Cooperation  in  Agriculture,  Marketing,  and  Bu/ral  Credit     93 

gI  Europe  have  established  their  reputation  for  ability  to  provide 
themselves  with  funds  in  time  of  need.  On  this  point  note  the 
following  takeii  f  rc«n  an  address  'by '  the :  Hon  J  Luigi  Luzz^tti^  a 
leader  of  the  Italian  people^;-  ]ry;L^ujd:)  -j.j  joil  [{hdh  iu>ijKijo>-'i/.  ■.i!i 

"The  Rural  Bank,  for  instatoc<6i''Vvhidi  "^arose'Jwi'fehout'' capital^ 
rich  only  in  its '  invisible  treasure  of  mutual  trust  and  human 
solidarity/is  the  fruit  of  the  mddeBt'  unrecognized  virtues  of  the 
country  folk,  bound  together  by  bohd^' of  mutual  affectiony  who 
assist  and  watch  over  each  other  with  '  the  subtle  vigilance  -of' 
neighbors.  And,  1  o  and  behold,  theSfe !  huMble ' '  f olk^  •  'toidi  i  of  •  >  boon 
nomic  lore,  have  accomplished  a  mirade,— due  to  the  fact'that  ;a 
moral  and  not  a  material  impulse  guided  their  work— the  miracle 
of  creatmg. capital  out'  Of  liothitig'."  They >liaV6 ' succeeded  in' ^coiii-i 
ing  their  simple  good  faith  and  their  honor,  and  in  transforming 
into  concrete  credit,— so  rebellious  to  all  idealistic-  considera^ 
tions,^— promises  of '  pa^yment  guaratiteed'  '  only  by  their/'  idbsetine; 
immortal  souls.  And  now  in  Germany' and  in  all  the  other  cbun-^ 
tries  which  have  followed  in  its  footsteps^' the  business  ti^ansacted 
by  these  banks,  founded  without  •capitaly>Md''Wkiclh  'h4Ve  t'Mborit 
ously  built  up  their  own  reserve  ftinds,  araounts'i  to  it)  "billions 
each  year,  and  they  represent  the  billionaires  of  agrarianipovertyJ') 

Some-bne  may^'sa^f'that'lhis  is'  all  right ' in'' Euro|ie,/;'l!)utothait.(lt 
would  not  do  in  America.  If  this' is' true;  theiii i the' America^ 
needs  something  else  more  than  hei  lieedg  moiiei\  'iAgaiiiiit'dsi  said 
that  cheap  moneiT*  for  J  the  '  AmeHcaii '  ':^armer  *'  igi » a-  ?  drete- wihich 
may  be  realized  $ome  time  in'  ifee'distaaift-ifuture.i  (On^tHie  ^ipoint 
we  need  only  say' that  there  are  fatiftierfei  who  are  gettimg  cheap 
money,  and  there  is-  iiO' copyright  on  their!  methods'  which  ipro-f 
hibits  the  Texas  fariiietfe'frbffi:  ap^lfeg  thefnnrigh't'bbwit'^tlf^'e^^^ 
sity  has  '  driven  soiile  -  pfeo j3le  W  ■  ■  dooperatl'cxh  and '  hecfessiityi  M^il  I 
drive  other  people  to  iti ' '  What  -  J#e' '  are  asking '  fori  is  >  'feafdershi^ 
#ith'  a  ^sioa'dlear'eriough  aiid' enthusiasm  strong! enough  to 'bring 
about  the  benefits' that'  h^^e  been'  secured  }fj  others" without  lwailfc^ 
ing  until  necessiity  forces  us  to  clO' somethings  •  In  "thei' lit era<iure 
which'  yon'in'ay;  ^eui-^  froni.  tthe  Bi^risiod^of  nBu'lliciiWielfarfe  yxjiua^ 
association  can  study  ' dut  all  of  these '  iqifestionk ■ '  ^  i  Takfe'  •  bp  • ' thfe 
Texas  Rural  Credit  law  and  compare ; it  to ''Otlife(r  laws.!!  Sttrdy  its 
jyro  visions  J  :  Among  th'eni  jyou'  m\l  'firid  •  thiit  it  ^  takes'  !at>i  least  ■ten 
^^eopie- 'to  ''i^tid'tiJ'JI^riihnyihatehavm^s^^  iriay/^belpi^ 


94  Bulletm  of  the  University  of  Texas 

for  in  installments,  and  that  the  smallest  savings  may  be  applied 
toward  this  end.  The  law  provides  that  members  borrowing  from 
the  Association  shall  not  be  charged  more  than  6  per  cent  interest. 
Study  its  provisions  of  one  man  one  vote,  and  note  how  you  are 
studying  an  association  of  men  rather  than  dollars.  There  is 
no  limit  to  the  amount  of  capital  or  the  number  of  shares  which 
you  may  own,  except  as  you  limit  your  own  savings.  Discuss  in 
open  meeting  the  provision  which  is  laid  down  that  loans  shall  be 
made  only  for  productive  purposes,  or  urgent  needs.  Discuss  in 
open  meeting  past  experiences  as  to  length  of  time  for  which 
loans  have  been  granted.  You  will  see  that  the  law  provides 
that  no  member  shall  borrow  an  amount  in  excess  of  $200.  Ex- 
amine the  question  as  to  whether  you  think  this  law  would  limit 
your  action.  You  will  find  out  when  you  compare  it  with  other 
state  laws  or  foreign  laws,  that  it  is  not  perfect.  But  it  cer- 
tainly is  wide  enough  and  broad  enough  and  good  enough  to 
allow  a  great  beginning,  and  it  can  be  changed  at  the  next  ses- 
sion of  the  Legislature.  Above  all  things,  remember  that  it 
ought  to  be  far  from  your  purpose  to  form  any  sort  of  organiza- 
tion for  the  express  purpose  of  eliminating  any  landlord  or  mer- 
chant or  banker.  You  are  to  be  concerned  with  business  and 
business  principles  and  not  personalities,  and  if  it  is  not  clear  to 
you  that  there  need  be  no  conflict  between  you  and  the  legitimate 
business  that  is  done  by  the  local  merchants  and  bankers,  or  if  it 
is  not  clear  to  the  merchants  and  bankers,  then  there  is  lack  of 
understanding  of  the  situation,  or  the  community  at  large  is  be- 
ing run  at  the  present  time  by  those  who  have  an  obscure  vision 
and  short-sighted  business  policies  and  abilities. 

It  is  to  be  hoped  that  what  has  been  said  above  will  make  clear 
the  fact  that  in  some  communities  it  will  be  best  to  have  a  tem- 
porary organization  or  society  before  the  real  chartered  credit 
union  is  launched.  In  other  places  it  'may  be  possible  to  start 
such  unions  without  much  preliminary  work.  In  either  case  it 
takes  leadership  before  the  work  will  start  at  all  and  up  to  date, 
June,  1914,  the  law  has  not  been  used.  The  preliminary  work  as 
suggested  above  will  clear  up  many  perplexities.  To  begin  is  the 
most  difficult  thing.  In  other  places  it  has  been  surprising  how 
people  with  surplus  savings  have  become  interested  and  invested 
in  an  institution  when  a  group  of  farmers  got  together,  pledged 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     95 

their  mutual  aid  and  responsibility  and  vowed  that  they  would 
go  deeper  into  the  study  of  their  problems  than  they  had  before. 
However,  not  much  can  be  reasonably  expected  from  outside 
sources  until  the  members  of  the  association  have  demonstrated 
their  earnestness  of  purpose  and  business  ability.  After  the  mem- 
bers concerned  have  proved  this  to  themselves,  then  it  is  time  to 
transfer  from  the  preliminary  organization  into  a  regular  char- 
tered and  incorporated  credit  union,  which  can  safely  make  loans, 
as  well  as  receive  savings. 


BIBLIOGRAPHY 

General 

American  Commission  Eeports  on  Agricultural  Cooperation  and 
Eural  Credits  in  Europe: 

Evidence,  Senate  Doc.  214,  63  Cong.,  1st  Session. 

Observations,  Senate  Doc.  261,  63  Cong.,  2nd  Session. 

Minority  Report,  Senate  Doc.  261,  Part  II,  63  Cong.,  2nd  Ses- 
sion. 

Bibliography,  Senate  Doc.  214,  Part  II,  63  Cong.,  2nd  Session. 

Cooperation  in  Agriculture.  Henry  W.  Wolff.  P.  S.  King  & 
Son.     London. 

Cooperation  at  Home  and  Abroad.  C.  R.  Fay.  P.  S.  King  & 
Son.     London. 

Produce  Markets  and  Marketing.     Wm.  T.  Seibels,  Chicago. 

Cooperation  among  Farmers.  John  Lee  Coulter.  Sturgis  & 
Walton  Co. 

Cooperation  in  New  England.  James  Ford.  Survey  Associ- 
ates, Publishers  for  the  Russell  Sage  Foundation.     New  York. 

Cooperation  in  Agriculture.  G.  Harold  Powell.  The  Mac- 
millan  Co. 

Marketing  and  Farm  Credits.  Report  of  the  First  National 
"Conference  on  Marketing  and  Farm  Credits,  at  Chicago,  1913. 
Cooperation  Magazine,  Minneapolis,  Minn. 

Proceedings  of  the  First  Meeting  of  the  Southern  States  x\sso- 
■ciation  of  Markets.  Texas  Department  of  Agriculture,  Bulletin 
:Nro.  36. 

Henry  Exall  Farm  Book.  Texas  Industrial  Congress,  Dallas, 
Texas. 

Yearbooks  of  ,the  United  States  Department  of  Agriculture, 
Washington,  D.  C. 

MaTJceting 

Yearbook  of  United   States  Department  of  Agriculture,   1909, 

p.   161. 

Yearbook,  1911,  p.  165.     "Reduction  of  Waste  in  Marketing." 
Yearbook  of  United   States   Department  of  Agriculture,   1912, 

p.  285, 


Cooperation  in  Agriculture,  Marketing,  and  Rural  Credit     97 

Annals  of  American  Academy  of  Political  and  Social  Science, 
July,  1913. 

A  Terminal  Market  System.  Mrs.  Elmer  Blade,  N.  Y.  (Dis- 
cusses City  Markets). 

Third  Annual  Meeting  of  Texas  Farmers^  Institute,  1913,  p.  73. 

Texas  Farmers'  Congress,  1911,  Texas  Department  of  Agricul- 
ture, p.  40. 

Texas  Farmers'  Congress,  1913,  Texas  Department  of  Agricul- 
ture, p.  56. 

Country  Gentleman.  Selling  Services  Department  in  practi- 
cally all  numbers  of  1914. 

Country  Gentleman.  Oct.  4,  1913;  Nov.  8,  1913;  Mar.  28, 
1914.     "Municipal  Market.'' 

Harper's  Weekly.    Nov.  8,  1913.    "Waste  in  Shipping  of  Food/' 

Outlook.     Feb.  1,  1913.     "The  Waste  in  Eetailing." 

MarTceting. — Schemes  for  Bettering 

Farm  and  Eanch.  Nov.  2,  1912;  Feb.  14,  1914;  Mar.  28,  1914. 
"Sumner's  Plan." 

Farm  and  Ranch.  May  24,  1913;  June  28,  1913.  "Harry 
Tracy's  Plan." 

Farm  and  Eanch.     Aug.  16,  1913.     E.  W.  Kirkpatrick. 

Marketing. — Proper  Packing  and  Preparation 

Country  Gentleman.  Feb.  7,  1914.  "Boxes  and  Crates  for 
Vegetables." 

Country  Gentleman.  April  12,  1913:  Oct.  4,  1913;  April  18', 
1914.     "Parcels  Post." 

MARKETING  OF  SPECIAL  CROPS 

{Cooperative  and  Otherwise) 

Apples.     Hood  Eiver.     Farmers'  Bulletin  No.  309. 

Cattle  Breeders.     Wisconsin.     Bulletin  No.  184. 

Cotton.  United  States.  Yearbook  U.  S.  Department  of  Agri- 
culture, 1912. 

Cotton.  United  States.  Yearbook  U.  S.  Department  of  Agri- 
culture, 1911. 


98  Bulletin  of  the  University  of  Texas 

Cotton.     United  States.     Eeport    of    Southern    Association    of 
'Markets. 

Cotton.  .  United  States.     Senate  Document  No.  113,  63rd  Con- 
gress, 1st  Session. 

Cotton.     United  States.     Yearbook  U.  S.  Department  of  Agri- 
culture.    "Marketing  and  Handling." 

Cotton.     United  States.     Bulletin  U.  S.  Department  of  Agri- 
culture No.  35.     "Cotton  Studies  in  Oklahoma.'' 

Eggs.     Minnesota.     Farmers'  Bulletin  No.  445. 

Eggs.     Farmers'  Bulletin  No.  405. 

Eggs.     Farmers'  Bulletin  No.   517. 

Eggs.     Farmers'  Bulletin  No.  112. 

Eggs.     Yearbook  Department  of  Agriculture,  1912,  p.  345. 

Eggs.     Yearbook  Department  of  Agriculture,  1911,  p.  467. 

Eggs.     General.     Yearbook   of  U.    S.   Department  of   Agricul- 
ture, 1910,  p.  461. 

Fruit.     General.     Yearbook  of.  U.   S.  Department  of  Agricul- 
ture, 1909,  p.  365. 

Fruit.     General.     Yearbook  of  U.   S.  Department  of  Agricul- 
ture, 1910,  p.  437. 

Fruit.     General.     U.    S.   Department   of   Agriculture   Bulletin 
No.  63.     (Orange  Shipping.) 

Purchase    of    Farm    Supplies.     Oregon.     Oregon    Agricultural 
College  Bulletin  No.  71. 

Poultry.'    General.     Bulletin  of  U.  S.  Department  of  Agricul- 
ture No.  17. 

Truck  and  Vegetables.     General.     Yearbook  of  U.  S.  Depart- 
ment of  Agriculture,  1912. 

Vegetables.     General.     Bulletin  No.   144.     Illinois  Experiment 
Station.     "Tomatoes  for  the  Early  Market." 

COOPERATIOX  AND  FARMERS^  ORGANIZATIONS 

Annals  of  American  Academy  of  Political  and  Social  Science. 
July,  1913. 
.        Oregon  Agricultural  College  Bulletin  No.  71. 

Senate  Document  992.     Notes  by  Maurice  F.  Egan,  on  Den- 
mark. 

'•Cooperation."     A  magazine  published  in  Minneapolis. 
North  American  Eeview.     June,  1913. 


Cooperation  in  Agriculture^  Marketing,  and  Rural  Credit     99 

Workrs  Work.     Sept.,  1912.     (Wisconsin.) 

Metropolitan  Magazine.     Jan.,  1914.     (Denmark.) 

The  Mission,  History  and  Times  of  the  Farmers'  Union.  Chas. 
S.  Barrett. 

Senate  Document  1071,  63rd  Congress,  3rd  Session.  "The 
American  Commission  and  Its  Work.'' 

Quarterly  Journal  of  Economics.  May,  1913.  "Eenters' 
Union." 

American  Society  of  Equity.  "The  Third  Power."  (J.  A. 
Everitt,  Indianapolis,  Ind.)  See  Equity  News,  Published  at 
Madison,  Wis. 

Farmers'  Fireside  and  Bulletin.  (Farmers'  Educational  and 
Cooperative  Union.)     Published  at  Arlington,  Texas. 

RURAL   CREDITS 

Boolcs 

Yearbook  of  the  United  States  Department  of  Agriculture, 
191?,  p.  25.     (Investigation  of  present  credit  conditions.) 

Yearbook  of  the  United  States  Department  of  Agriculture,. 
1913,  p.  257. 

Principles  of  Eural  Economics.     T.  N.  Carver,  p.  275. 

Marketing  and  Farm  Credits.  Cooperation  Magazine,  Minne- 
apolis, Minn. 

People's  Banks.     H.  W.  Wolff.     P.  S.  King  &  Son,     London. 

Reports  and  Pamphlets 

Banking  Laws  of  Texas,  Digest,  1913.  Has  the  text  of  the 
Texas  Rural  Credit  Law.  Send  to  the  Commissioner  of  Insur- 
ance and  Banking. 

Credit  Conditions  in  a  Cotton  State.  L.  H.  Haney.  Pub- 
lished in  American  Economic  Eeview,  March,  1914.  Also  as  a 
separate  pamphlet. 

Eeport  of  the  Agricultural  Credit  Commission  of  the  Province 
of  Saskatchewan,  Canada,  1913. 

Senate  Document  251,  Part  I,  63rd  Congress,  2nd  Session. 
"Needs  of  the  iVmerican  Farmer." 


100  Bulletin  of  the  University  of  Texas 

Senate  Doouinent  260,  63rd  Congress,  2nd  Session.  (Fred.  J. 
Haskin.) 

Agricultural  Credit  and  Cooperation  in  Germany.  Eeport  to 
the  British  Board  of  Agriculture  and  Fisheries,  by  J.  E.  Cahill, 
Published  in  the  United  States  as  Senate  Document  17,  63rd 
Congress,  1st  Session. 

Senate  Document  380,  Parts  1  and  2;  63rd  Congress,  2nd  Ses- 
sion. Eeport  on  European  system  with  suggested  legislation  for 
United  States. 

Senate  Document  865,  62nd  Congress,  2nd  Session;  European 
systems  modified  to  meet  United  States^  conditions. 

Senate  Document  141,  63rd  Congress,  1st  Session.  Davis  plan 
of  Eural  Banks. 

Hearings  before  the  Sub-committee  of  the  Committee  on  Bank- 
ing and  Currency;  House  of  Eepresentatives,  Parts  1-23 — ready. 

Senate  Document  1006;  C.  H.  Davis;  Eural  Credit  Plan  for 
Virginia. 

Bulletin  289.     University  of  Texas. 

Senate  Document  158,  63rd  Congress,  1st  Session.  Bill  of 
Senator  Fletcher  on  National  Eural  Banking  System. 

Senate  Document  260,  63rd  Congress,  1st  Sest^ion;  David 
Lubin's  address  on  Eaiffeisen. 

Senate  Document  380,  Part  III,  63rd  Congress,  2nd  Session; 
Ptersonal  or  Short-Time  Credit. 

A  Cooperative  Plan  to  Provide  5%  Money  for  Farmers.  John 
Sprunt  Hill,  Durham,  North  Carolina. 

Magazine  Articles 

Farm  and  Eanch,  April  19,  1913.     "Texas  Eural  Credit  Law/"' 
Progressive  Farmer,  Dallas,  Texas,  Feb.  28,  1914.    "Symposium 
on  Eural  Credits.'^ 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW 


AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  50  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.00  ON  THE  SEVENTH  DAY 
OVERDUE. 


^M 


*4% 


liun'STlB 


''^-    24  1943 


^^ 


:^^>^ 


/J^^'' 


-jr 


'X^ 


4^M^ 


^ 


a 


M 


i£V 


LIBRARY  USE 


?lWlay'.y  r 


•E)it>ii^ 


"T^W 


mr 


v»'  ^  > 


RZw4-.i  Vtu.t. 


Jfl«2S7Q   IPMEi 


LD  21-100m-7,'40 (6936s) 


LOAN    O^F^r, 


